Sunstone Hotel Investors (NYSE: SHO) and Pebblebrook Hotel Trust (NYSE:PEB) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.

Volatility & Risk

Sunstone Hotel Investors has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500. Comparatively, Pebblebrook Hotel Trust has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500.

Earnings and Valuation

This table compares Sunstone Hotel Investors and Pebblebrook Hotel Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sunstone Hotel Investors $1.19 billion 3.11 $344.05 million $0.78 21.05
Pebblebrook Hotel Trust $796.77 million 3.16 $242.63 million $0.30 121.60

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

Profitability

This table compares Sunstone Hotel Investors and Pebblebrook Hotel Trust’s 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%
Pebblebrook Hotel Trust 5.09% 2.59% 1.45%

Dividends

Sunstone Hotel Investors pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. Pebblebrook Hotel Trust pays an annual dividend of $1.52 per share and has a dividend yield of 4.2%. Sunstone Hotel Investors pays out 25.6% of its earnings in the form of a dividend. Pebblebrook Hotel Trust pays out 506.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sunstone Hotel Investors has raised its dividend for 4 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and price targets for Sunstone Hotel Investors and Pebblebrook Hotel Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sunstone Hotel Investors 2 5 2 0 2.00
Pebblebrook Hotel Trust 2 3 5 0 2.30

Sunstone Hotel Investors currently has a consensus price target of $16.13, indicating a potential downside of 1.80%. Pebblebrook Hotel Trust has a consensus price target of $34.31, indicating a potential downside of 5.94%. Given Sunstone Hotel Investors’ higher probable upside, equities research analysts plainly believe Sunstone Hotel Investors is more favorable than Pebblebrook Hotel Trust.

Summary

Sunstone Hotel Investors beats Pebblebrook Hotel Trust on 9 of the 15 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 Pebblebrook Hotel Trust

Pebblebrook Hotel Trust is an internally managed hotel investment company. The Company is a real estate investment trust (REIT) that acquires and invests in hotel properties located primarily in cities of the United States. As of December 31, 2016, the Company owned 29 hotels with a total of 7,219 guest rooms. The hotels are located in the markets: Atlanta (Buckhead), Georgia; Boston, Massachusetts; Miami (Coral Gables), Florida; Minneapolis, Minnesota; Naples, Florida; Nashville, Tennessee; New York, New York; Philadelphia, Pennsylvania; Portland, Oregon; San Diego, California; San Francisco, California; Santa Monica, California; Seattle, Washington; Stevenson, Washington; Washington, D.C.; West Hollywood, California, and Los Angeles (Beverly Hills), California. The Company’s assets are held by, and all of the operations are conducted through, Pebblebrook Hotel, L.P. (the Operating Partnership).

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