Analyzing LaSalle Hotel Properties (LHO) and Diamondrock Hospitality (DRH)

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

Analyst Recommendations

This is a summary of current recommendations and price targets for LaSalle Hotel Properties and Diamondrock Hospitality, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LaSalle Hotel Properties 2 10 2 0 2.00
Diamondrock Hospitality 3 4 5 0 2.17

LaSalle Hotel Properties currently has a consensus price target of $28.46, indicating a potential upside of 0.35%. Diamondrock Hospitality has a consensus price target of $11.43, indicating a potential upside of 2.07%. Given Diamondrock Hospitality’s stronger consensus rating and higher probable upside, analysts plainly believe Diamondrock Hospitality is more favorable than LaSalle Hotel Properties.

Dividends

LaSalle Hotel Properties pays an annual dividend of $1.80 per share and has a dividend yield of 6.3%. Diamondrock Hospitality pays an annual dividend of $0.50 per share and has a dividend yield of 4.5%. LaSalle Hotel Properties pays out 66.9% of its earnings in the form of a dividend. 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. Diamondrock Hospitality has increased its dividend for 5 consecutive years. LaSalle Hotel Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares LaSalle Hotel Properties and Diamondrock Hospitality’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LaSalle Hotel Properties 27.85% 13.05% 8.48%
Diamondrock Hospitality 11.47% 5.41% 3.23%

Risk & Volatility

LaSalle Hotel Properties has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, Diamondrock Hospitality has a beta of 1.38, indicating that its stock price is 38% more volatile than the S&P 500.

Valuation & Earnings

This table compares LaSalle Hotel Properties and Diamondrock Hospitality’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
LaSalle Hotel Properties $1.18 billion 2.72 $371.93 million $2.69 10.54
Diamondrock Hospitality $866.34 million 2.59 $242.01 million $0.49 22.86

LaSalle Hotel Properties has higher revenue and earnings than Diamondrock Hospitality. LaSalle 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.

Summary

LaSalle Hotel Properties beats Diamondrock Hospitality on 9 of the 15 factors compared between the two stocks.

LaSalle Hotel Properties Company Profile

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.

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.

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