Sunstone Hotel Investors (SHO) vs. Hyatt Hotels (H) Financial Comparison

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

Profitability

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

Net Margins Return on Equity Return on Assets
Sunstone Hotel Investors 10.28% 4.41% 2.83%
Hyatt Hotels 12.81% 4.39% 2.13%

Volatility & Risk

Sunstone Hotel Investors has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500. Comparatively, Hyatt Hotels has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500.

Institutional & Insider Ownership

38.3% of Hyatt Hotels shares are owned by institutional investors. 0.8% of Sunstone Hotel Investors shares are owned by company insiders. Comparatively, 18.4% of Hyatt Hotels shares are owned 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

Sunstone Hotel Investors pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. Hyatt Hotels pays an annual dividend of $0.60 per share and has a dividend yield of 0.8%. Sunstone Hotel Investors pays out 16.4% of its earnings in the form of a dividend. Hyatt Hotels pays out 33.7% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Sunstone Hotel Investors and Hyatt Hotels, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sunstone Hotel Investors 1 7 3 0 2.18
Hyatt Hotels 0 6 9 0 2.60

Sunstone Hotel Investors presently has a consensus price target of $16.81, suggesting a potential downside of 0.40%. Hyatt Hotels has a consensus price target of $82.15, suggesting a potential upside of 2.83%. Given Hyatt Hotels’ stronger consensus rating and higher probable upside, analysts plainly believe Hyatt Hotels is more favorable than Sunstone Hotel Investors.

Earnings and Valuation

This table compares Sunstone Hotel Investors and Hyatt Hotels’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sunstone Hotel Investors $1.19 billion 3.19 $145.37 million $1.22 13.84
Hyatt Hotels $4.69 billion 1.99 $249.00 million $1.78 44.88

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

Summary

Hyatt Hotels beats Sunstone Hotel Investors on 11 of the 16 factors compared between the two stocks.

About Sunstone Hotel Investors

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust ("REIT") that as of May 7, 2018 has interests in 25 hotels comprised of 12,450 rooms. Sunstone's hotels are primarily in the urban and resort upper upscale segment and are predominantly operated under nationally recognized brands, such as Marriott, Hilton and Hyatt. For further information, please visit Sunstone's website at www.sunstonehotels.com.

About Hyatt Hotels

Hyatt Hotels Corporation, a hospitality company, develops, owns, operates, manages, franchises, licenses, or provides services to hotels, resorts, residential, and other properties. It operates in four segments: Owned and Leased Hotels, Americas Management and Franchising, ASPAC Management and Franchising, and EAME/SW Asia Management and Franchising. The company operates its properties under the Hyatt, Park Hyatt, Miraval, Grand Hyatt, Hyatt Regency, Andaz, Hyatt Centric, The Unbound Collection by Hyatt, Hyatt Place, Hyatt House, Hyatt Ziva, Hyatt Zilara, echale, Hyatt Residence Club, Hyatt Residences, World of Hyatt, and Hyatt Resorts brands and trademarks. As of March 31, 2018, its portfolio consisted of approximately 700 properties in 50 countries. It primarily serves corporations; national, state, and regional associations; specialty market accounts, including social, government, military, educational, religious, and fraternal accounts; travel organizations; and a group of individual consumers. Hyatt Hotels Corporation has a strategic development agreement with Tianfu Minyoun Hospitality for the expansion of Hyatt Place and Hyatt House hotels in China. The company was formerly known as Global Hyatt Corporation and changed its name to Hyatt Hotels Corporation in June 2009. Hyatt Hotels Corporation was founded in 1957 and is headquartered in Chicago, Illinois.

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