Diamondrock Hospitality (DRH) versus Ashford Hospitality Trust (AHT) Critical Survey

Diamondrock Hospitality (NYSE: DRH) and Ashford Hospitality Trust (NYSE:AHT) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, earnings, dividends and risk.

Volatility & Risk

Diamondrock Hospitality has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500. Comparatively, Ashford Hospitality Trust has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500.

Valuation & Earnings

This table compares Diamondrock Hospitality and Ashford Hospitality Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Diamondrock Hospitality $896.56 million 2.57 $114.79 million $0.45 25.53
Ashford Hospitality Trust $1.49 billion 0.43 -$46.28 million ($1.37) -4.81

Diamondrock Hospitality has higher earnings, but lower revenue than Ashford Hospitality Trust. Ashford Hospitality Trust is trading at a lower price-to-earnings ratio than Diamondrock Hospitality, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Diamondrock Hospitality and Ashford Hospitality Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Diamondrock Hospitality 10.47% 4.97% 2.95%
Ashford Hospitality Trust -5.61% -10.79% -1.68%

Institutional and Insider Ownership

71.0% of Ashford Hospitality Trust shares are owned by institutional investors. 1.1% of Diamondrock Hospitality shares are owned by company insiders. Comparatively, 18.2% of Ashford Hospitality Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

Diamondrock Hospitality pays an annual dividend of $0.50 per share and has a dividend yield of 4.4%. Ashford Hospitality Trust pays an annual dividend of $0.48 per share and has a dividend yield of 7.3%. Diamondrock Hospitality pays out 111.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ashford Hospitality Trust pays out -35.0% of its earnings in the form of a dividend. Ashford Hospitality Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Diamondrock Hospitality and Ashford Hospitality Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Diamondrock Hospitality 0 3 7 0 2.70
Ashford Hospitality Trust 0 2 4 0 2.67

Diamondrock Hospitality currently has a consensus target price of $12.00, indicating a potential upside of 4.44%. Ashford Hospitality Trust has a consensus target price of $7.50, indicating a potential upside of 13.81%. Given Ashford Hospitality Trust’s higher possible upside, analysts plainly believe Ashford Hospitality Trust is more favorable than Diamondrock Hospitality.

Summary

Diamondrock Hospitality beats Ashford Hospitality Trust on 9 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.

Ashford Hospitality Trust Company Profile

Ashford Hospitality Trust, Inc. is an externally-advised real estate investment trust (REIT). The Company is focused on investing in the hospitality industry with a focus on full-service upscale and upper-upscale hotels in the United States. The Company owns its lodging investments and conducts its business through Ashford Hospitality Limited Partnership (Ashford Trust OP), its operating partnership. The Company’s portfolio consists of 121 properties with over 25000 rooms; 86 hotel condominium units at WorldQuest Resort in Orlando, Florida; a 96.6% ownership in Ashford Quantitative Alternatives (U.S.), LP (the AQUA U.S. Fund); a 29.7% ownership in Ashford Inc., and a 13.3% ownership in OpenKey.

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