Sunstone Hotel Investors (NYSE: SHO) and LaSalle Hotel Properties (NYSE:LHO) are both mid-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, profitabiliy and valuation.

Risk and Volatility

Sunstone Hotel Investors has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500. Comparatively, LaSalle Hotel Properties has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Profitability

This table compares Sunstone Hotel Investors and LaSalle Hotel Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sunstone Hotel Investors 15.41% 7.70% 4.91%
LaSalle Hotel Properties 27.85% 13.05% 8.48%

Analyst Ratings

This is a breakdown of current ratings and price targets for Sunstone Hotel Investors and LaSalle Hotel Properties, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sunstone Hotel Investors 3 6 2 0 1.91
LaSalle Hotel Properties 2 10 2 0 2.00

Sunstone Hotel Investors presently has a consensus target price of $15.40, suggesting a potential downside of 5.35%. LaSalle Hotel Properties has a consensus target price of $28.46, suggesting a potential downside of 1.53%. Given LaSalle Hotel Properties’ stronger consensus rating and higher possible upside, analysts plainly believe LaSalle Hotel Properties is more favorable than Sunstone Hotel Investors.

Earnings and Valuation

This table compares Sunstone Hotel Investors and LaSalle Hotel Properties’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sunstone Hotel Investors $1.19 billion 3.08 $345.53 million $0.78 20.86
LaSalle Hotel Properties $1.18 billion 2.77 $371.93 million $2.69 10.74

LaSalle Hotel Properties has higher revenue, but lower earnings than Sunstone Hotel Investors. LaSalle Hotel Properties is trading at a lower price-to-earnings ratio than Sunstone Hotel Investors, indicating that it is currently the more affordable of the two stocks.

Dividends

Sunstone Hotel Investors pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. LaSalle Hotel Properties pays an annual dividend of $1.80 per share and has a dividend yield of 6.2%. Sunstone Hotel Investors pays out 25.6% of its earnings in the form of a dividend. LaSalle Hotel Properties pays out 66.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sunstone Hotel Investors has raised its dividend for 5 consecutive years.

Summary

LaSalle Hotel Properties beats Sunstone Hotel Investors on 8 of the 14 factors compared between the two stocks.

About Sunstone Hotel Investors

Sunstone Hotel Investors, Inc. operates as a self-managed and self-administered real estate investment trust. The Company’s primary business is to acquire, own, asset manage and renovate primarily urban and resort upper upscale hotels in the United States. It operates through hotel ownership segment. It owns primarily urban and resort upper upscale hotels in the United States. The Company’s hotels are operated under nationally recognized brands, such as Marriott, Hilton and Hyatt. As of July 26, 2017 the Company has interest in 27 hotels, including 13,202 rooms. The Company’s hotels are located in gateway markets, such as Boston, New York, Washington, District of Columbia (DC)/Baltimore, Chicago, Orlando, New Orleans, San Francisco, Los Angeles, Orange County and San Diego.

About LaSalle Hotel Properties

LaSalle Hotel Properties is a self-administered and self-managed real estate investment trust. The Company primarily buys, owns, redevelops and leases upscale and luxury full-service hotels located in convention, resort and urban business markets. As of December 31, 2016, the Company owned interests in 46 hotels with approximately 11,450 guest rooms located in nine states of the United States and the District of Columbia (DC). As of December 31, 2016, the Company’s properties included Hotel Amarano Burbank; Hilton San Diego Gaslamp Quarter; Hotel Solamar; San Diego Paradise Point Resort and Spa; The Hilton San Diego Resort and Spa; Harbor Court Hotel; The Marker San Francisco; Chamberlain West Hollywood; Le Montrose Suite Hotel; The Grafton on Sunset; Hotel George; Hotel Rouge; Mason & Rook Hotel; The Donovan; The Liaison Capitol Hill; The Marker Waterfront Resort; Hotel Chicago; Onyx Hotel; Park Central Hotel New York; The Heathman Hotel; Westin Philadelphia, and Lansdowne Resort.

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