Comparing Diamondrock Hospitality (NYSE:DRH) and Chesapeake Lodging Trust (CHSP)

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Chesapeake Lodging Trust and Diamondrock Hospitality, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chesapeake Lodging Trust 0 2 1 0 2.33
Diamondrock Hospitality 3 4 5 0 2.17

Chesapeake Lodging Trust currently has a consensus target price of $24.33, indicating a potential downside of 2.51%. Diamondrock Hospitality has a consensus target price of $11.43, indicating a potential downside of 2.21%. Given Diamondrock Hospitality’s higher probable upside, analysts plainly believe Diamondrock Hospitality is more favorable than Chesapeake Lodging Trust.

Institutional & Insider Ownership

97.5% of Chesapeake Lodging Trust shares are owned by institutional investors. 2.2% of Chesapeake Lodging Trust shares are owned by insiders. Comparatively, 1.1% of Diamondrock Hospitality shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Chesapeake Lodging Trust pays an annual dividend of $1.60 per share and has a dividend yield of 6.4%. Diamondrock Hospitality pays an annual dividend of $0.50 per share and has a dividend yield of 4.3%. Chesapeake Lodging Trust pays out 146.8% 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 pays out 94.3% 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 raised its dividend for 5 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Chesapeake Lodging Trust 11.77% 6.07% 3.52%
Diamondrock Hospitality 12.15% 5.83% 3.48%

Earnings & Valuation

This table compares Chesapeake Lodging Trust and Diamondrock Hospitality’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Chesapeake Lodging Trust $613.96 million 2.40 $181.40 million $1.09 22.90
Diamondrock Hospitality $879.73 million 2.66 $248.98 million $0.53 22.06

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

Volatility and Risk

Chesapeake Lodging Trust has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, Diamondrock Hospitality has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500.

Summary

Diamondrock Hospitality beats Chesapeake Lodging Trust on 9 of the 17 factors compared between the two stocks.

About Chesapeake Lodging Trust

Chesapeake Lodging Trust is a real estate investment trust. The Company is focused on investments primarily in upper-upscale hotels in various business and convention markets and, on a selective basis, select-service hotels in urban settings or other locations in the United States. The Company operates through the hotel ownership segment. The Company conducts its operations primarily though Chesapeake Lodging, L.P., its operating partnership (the Operating Partnership). As of February 17, 2017, the Company owned 22 hotels. As of February 17, 2017, the Company’s portfolio included Hyatt Regency Boston; Hilton Checkers Los Angeles; Boston Marriott Newton; Le Meridien San Francisco; Hotel Indigo San Diego Gaslamp Quarter; Courtyard Washington Capitol Hill/Navy Yard; Hotel Adagio San Francisco, Autograph Collection; Denver Marriott City Center; Hyatt Herald Square New York, and Ace Hotel and Theater Downtown Los Angeles. As of February 17, 2017, the Company’s hotels had 6,694 rooms.

About Diamondrock Hospitality

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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