DiamondRock Hospitality (NYSE: DRH) and RLJ Lodging Trust (NYSE:RLJ) 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, valuation, analyst recommendations, dividends and profitability.
DiamondRock Hospitality pays an annual dividend of $0.50 per share and has a dividend yield of 4.4%. RLJ Lodging Trust pays an annual dividend of $1.32 per share and has a dividend yield of 5.9%. 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. RLJ Lodging Trust pays out 173.7% 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 6 consecutive years.
94.4% of RLJ Lodging Trust shares are owned by institutional investors. 1.1% of DiamondRock Hospitality shares are owned by company insiders. Comparatively, 2.3% of RLJ Lodging Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
This table compares DiamondRock Hospitality and RLJ Lodging Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|RLJ Lodging Trust||12.30%||5.80%||3.04%|
Earnings & Valuation
This table compares DiamondRock Hospitality and RLJ Lodging Trust’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|DiamondRock Hospitality||$896.56 million||2.52||$114.79 million||$0.45||25.04|
|RLJ Lodging Trust||$1.16 billion||3.38||$200.35 million||$0.76||29.47|
RLJ Lodging Trust has higher revenue and earnings than DiamondRock Hospitality. DiamondRock Hospitality is trading at a lower price-to-earnings ratio than RLJ Lodging Trust, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings for DiamondRock Hospitality and RLJ Lodging Trust, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|RLJ Lodging Trust||1||5||5||0||2.36|
DiamondRock Hospitality currently has a consensus target price of $12.00, suggesting a potential upside of 6.48%. RLJ Lodging Trust has a consensus target price of $23.36, suggesting a potential upside of 4.30%. Given DiamondRock Hospitality’s stronger consensus rating and higher probable upside, research analysts clearly believe DiamondRock Hospitality is more favorable than RLJ Lodging Trust.
Risk and Volatility
DiamondRock Hospitality has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500. Comparatively, RLJ Lodging Trust has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.
RLJ Lodging Trust beats DiamondRock Hospitality on 11 of the 17 factors compared between the two stocks.
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.
About RLJ Lodging Trust
RLJ Lodging Trust is a self-administered real estate investment trust. The Company is engaged in the acquisition of focused-service and compact full-service hotels. As of December 31, 2016, the Company owned 122 hotels with approximately 20,100 rooms, located in 21 states and the District of Columbia, and an interest in one mortgage loan secured by a hotel. Its hotels’ brand affiliations include Residence Inn, Courtyard, SpringHill Suites, Fairfield Inn & Suites, Marriott, Renaissance, Hilton Garden Inn, Hampton Inn/Hampton Inn & Suites, Embassy Suites, DoubleTree, Homewood Suites, Hilton, Hyatt House, Hyatt Place and Hyatt/Hyatt Centric. Its operating partnership is RLJ Lodging Trust, L.P. Its properties include Courtyard San Francisco, Courtyard Boulder Longmont, Residence Inn Longmont Boulder, DoubleTree Grand Key Resort, Courtyard Atlanta Buckhead, Courtyard Chicago Southeast Hammond, Courtyard Louisville Northeast, DoubleTree Hotel Columbia and Residence Inn Detroit Novi.
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