Summit Hotel Properties (INN) and Chatham Lodging Trust (REIT) (CLDT) Critical Analysis

Summit Hotel Properties (NYSE: INN) and Chatham Lodging Trust (REIT) (NYSE:CLDT) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, risk, institutional ownership and valuation.

Profitability

This table compares Summit Hotel Properties and Chatham Lodging Trust (REIT)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Summit Hotel Properties 20.21% 8.96% 5.28%
Chatham Lodging Trust (REIT) 9.03% 3.90% 2.04%

Risk & Volatility

Summit Hotel Properties has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500. Comparatively, Chatham Lodging Trust (REIT) has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.

Earnings and Valuation

This table compares Summit Hotel Properties and Chatham Lodging Trust (REIT)’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Summit Hotel Properties $473.93 million 3.29 $107.80 million $0.82 18.23
Chatham Lodging Trust (REIT) $293.82 million 3.51 $31.48 million $0.68 33.41

Summit Hotel Properties has higher revenue and earnings than Chatham Lodging Trust (REIT). Summit Hotel Properties is trading at a lower price-to-earnings ratio than Chatham Lodging Trust (REIT), indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Summit Hotel Properties and Chatham Lodging Trust (REIT), as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Summit Hotel Properties 1 0 7 0 2.75
Chatham Lodging Trust (REIT) 0 6 1 0 2.14

Summit Hotel Properties currently has a consensus price target of $17.44, suggesting a potential upside of 16.64%. Chatham Lodging Trust (REIT) has a consensus price target of $20.50, suggesting a potential downside of 9.77%. Given Summit Hotel Properties’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Summit Hotel Properties is more favorable than Chatham Lodging Trust (REIT).

Insider & Institutional Ownership

95.0% of Summit Hotel Properties shares are held by institutional investors. Comparatively, 76.7% of Chatham Lodging Trust (REIT) shares are held by institutional investors. 1.7% of Summit Hotel Properties shares are held by company insiders. Comparatively, 3.6% of Chatham Lodging Trust (REIT) shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Summit Hotel Properties pays an annual dividend of $0.68 per share and has a dividend yield of 4.5%. Chatham Lodging Trust (REIT) pays an annual dividend of $1.32 per share and has a dividend yield of 5.8%. Summit Hotel Properties pays out 82.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chatham Lodging Trust (REIT) pays out 194.1% 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 2 consecutive years and Chatham Lodging Trust (REIT) has increased its dividend for 3 consecutive years. Chatham Lodging Trust (REIT) is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Summit Hotel Properties beats Chatham Lodging Trust (REIT) on 13 of the 17 factors compared between the two stocks.

About Summit Hotel Properties

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.

About Chatham Lodging Trust (REIT)

Chatham Lodging Trust is a real estate investment trust. The Company invests primarily in upscale extended-stay and premium-branded select-service hotels. All of the Company’s assets are held by, and all of its operations are conducted through Chatham Lodging, L.P. (the Operating Partnership). As of December 31, 2016, the Company owned 38 hotels with an aggregate of 5,712 rooms located in 15 states and the District of Columbia. As of December 31, 2016, the Company’s hotels included upscale extended-stay hotels that operate under the Residence Inn by Marriott brand (15 hotels) and Homewood Suites by Hilton brand (nine hotels), as well as premium-branded select-service hotels that operate under the Courtyard by Marriott brand (four hotels), the Hampton Inn or Hampton Inn and Suites by Hilton brand (three hotels), the Hilton Garden Inn by Hilton brand (three hotels), the SpringHill Suites by Marriott brand (two hotels) and the Hyatt Place brand (two hotels).

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