Diamondrock Hospitality (NYSE: DRH) and Summit Hotel Properties (NYSE:INN) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.
This table compares Diamondrock Hospitality and Summit Hotel Properties’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Summit Hotel Properties||21.97%||9.89%||5.83%|
Institutional & Insider Ownership
95.3% of Summit Hotel Properties shares are held by institutional investors. 1.1% of Diamondrock Hospitality shares are held by insiders. Comparatively, 1.7% of Summit Hotel Properties shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares Diamondrock Hospitality and Summit Hotel Properties’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Diamondrock Hospitality||$866.34 million||2.45||$242.01 million||$0.49||21.63|
|Summit Hotel Properties||$475.70 million||3.43||$154.58 million||$0.90||17.41|
Diamondrock Hospitality has higher revenue and earnings than Summit Hotel Properties. Summit Hotel Properties is trading at a lower price-to-earnings ratio than Diamondrock Hospitality, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Diamondrock Hospitality has a beta of 1.39, meaning that its stock price is 39% more volatile than the S&P 500. Comparatively, Summit Hotel Properties has a beta of 1.22, meaning that its stock price is 22% more volatile than the S&P 500.
Diamondrock Hospitality pays an annual dividend of $0.50 per share and has a dividend yield of 4.7%. Summit Hotel Properties pays an annual dividend of $0.68 per share and has a dividend yield of 4.3%. Diamondrock Hospitality pays out 102.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Summit Hotel Properties pays out 75.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Summit Hotel Properties has increased its dividend for 3 consecutive years.
This is a summary of current ratings and price targets for Diamondrock Hospitality and Summit Hotel Properties, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Summit Hotel Properties||1||1||6||0||2.63|
Diamondrock Hospitality presently has a consensus price target of $12.00, indicating a potential upside of 13.21%. Summit Hotel Properties has a consensus price target of $17.43, indicating a potential upside of 11.22%. Given Diamondrock Hospitality’s higher possible upside, research analysts clearly believe Diamondrock Hospitality is more favorable than Summit Hotel Properties.
Summit Hotel Properties beats Diamondrock Hospitality on 11 of the 16 factors compared between the two stocks.
Diamondrock Hospitality Company Profile
DiamondRock Hospitality Company is a real estate investment trust (REIT). As of December 31, 2016, the Company owned a portfolio of 26 hotels and resorts that contains 9,472 guest rooms located in 17 different markets in North America and the United States Virgin Islands. Its business is to acquire, own, asset manage and renovate hotel properties in the United States. Its portfolio is concentrated in gateway cities and destination resort locations. It conducts its business through an umbrella partnership REIT (UPREIT) in, which its hotels are owned by subsidiaries of its operating partnership, DiamondRock Hospitality Limited Partnership. The Company is the general partner of its operating partnership and owns, either directly or indirectly, all of the limited partnership units of its operating partnership. The Company leases all of its domestic hotels to taxable REIT subsidiary, Bloodstone TRS, Inc. (TRS) lessees.
Summit Hotel Properties Company Profile
Summit Hotel Properties, Inc. is a real estate investment trust (REIT). The Company is focused primarily on owning premium-branded, select-service hotels in the Upscale segment of the United States lodging industry. The Company’s portfolio consists of 79 hotels with a total of 11,590 guestrooms located in 24 states. The Company’s hotels are located in markets, such as business and corporate headquarters, retail centers, airports and tourist attractions. The Company’s portfolio is located in urban and suburban markets. Based on total number of guestrooms, approximately 92% of the Company’s portfolio is positioned in over 50 metropolitan statistical areas (MSAs), and approximately 96% is located within over 100 MSAs. Based on total number of guestrooms, approximately 99% of the Company’s hotels operate under franchise brands owned by Marriott International, Inc., Hilton Worldwide, InterContinental Hotels Group, and an affiliate of Hyatt Hotels Corporation.
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