Education
About Us
Working with TipRanks
Follow Us
Sunstone Hotel Investors (SHO)
NYSE:SHO
Top Page
Sunstone Hotel
(NYSE:SHO)
64Neutral
Positive Factors
Mergers and Acquisitions
Trinity Investments has expressed interest in acquiring SHO for $13/sh, offering a ~20% premium to the current stock price.
Revenue Performance
Sunstone Hotel Investors reported stronger total revenues and RevPAR in the fourth quarter, coming in above market estimates and consensus.
Negative Factors
Guidance and Forecast
Sunstone Hotel Investors' 2025 EBITDA guidance came in below consensus, potentially putting pressure on the stock.
Sunstone Hotel (SHO) vs. S&P 500 (SPY)
Market Cap
$2.00B
Dividend Yield3.35%
Average Volume (3M)2.01M
Price to Earnings (P/E)74.1
Beta (1Y)0.98
Revenue Growth-8.18%
EPS Growth-85.42%
CountryUS
Employees40
SectorReal Estate
Sector Strength69
IndustryREITs
Share Statistics
EPS (TTM)0.14
Shares Outstanding201,019,100
10 Day Avg. Volume2,513,990
30 Day Avg. Volume2,008,530
Financial Highlights & Ratios
PEG Ratio0.17
Price to Book (P/B)N/A
Price to Sales (P/S)2.25
Price to Cash Flow (P/CF)16.70
P/FCF Ratio16.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$11.50Price Target Upside15.81% Upside
Rating ConsensusHold
Number of Analyst Covering5
Sunstone Hotel Business Overview & Revenue Model
Company DescriptionSunstone Hotel (SHO) is a prominent hospitality company that specializes in owning and operating upscale hotels in major urban and resort destinations. The company's portfolio includes a diverse range of properties, catering to both business and leisure travelers. SHO focuses on delivering exceptional guest experiences through high-quality accommodations, superior service, and extensive amenities, positioning itself as a leader in the luxury hotel sector.
How the Company Makes MoneySunstone Hotel (SHO) generates revenue primarily through hotel operations, which include room bookings, food and beverage sales, and other guest services such as events and conferences. The company benefits from strategic locations and premium pricing, attracting a clientele willing to pay for luxury experiences. Additionally, SHO partners with renowned hospitality brands to manage its properties, enhancing its market appeal and operational efficiency. Seasonal demand fluctuations, corporate contracts, and loyalty programs also play significant roles in optimizing its revenue streams.
Sunstone Hotel Financial Statement Overview
Summary
Sunstone Hotel demonstrates strong financial stability with a robust balance sheet and low leverage, reducing financial risks. However, declining revenue and profitability margins highlight challenges in maintaining growth and operational efficiency. The cash flow remains stable, but further improvements are necessary to enhance free cash flow growth.Income Statement
Sunstone Hotel has shown inconsistent revenue growth over the years, with a recent decline in total revenue from $985.98 million in 2023 to $905.81 million in 2024. The gross profit margin remains strong at 100%, indicating efficient cost management. However, net profit margin decreased significantly from 20.96% in 2023 to 4.77% in 2024, indicating lower profitability. The EBIT and EBITDA margins also declined sharply, reflecting reduced operational profitability.65
Positive
Balance Sheet
The company's balance sheet is robust with a strong equity position, as evidenced by a high equity ratio of approximately 67.7%. The debt-to-equity ratio has improved significantly, dropping from 0.38 in 2023 to 0.01 in 2024, reflecting a reduction in total debt. Return on equity decreased to 2.06% in 2024 from 9.54% in 2023, indicating lower profitability relative to shareholders' equity.75
Positive
Cash Flow
Sunstone Hotel's cash flow position remains stable with consistent free cash flow. The operating cash flow to net income ratio improved due to a lower net income, indicating strong cash generation relative to earnings. However, free cash flow growth has stagnated, suggesting challenges in improving cash generation.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 905.81M | 985.98M | 912.05M | 509.15M | 267.91M | Gross Profit |
| 905.81M | 476.46M | 463.50M | 218.18M | 16.22M | EBIT |
| 78.59M | 245.22M | 104.59M | -85.44M | -244.11M | EBITDA |
| 118.74M | 387.31M | 249.23M | 43.24M | -107.06M | Net Income Common Stockholders |
| 43.26M | 206.71M | 87.29M | 34.30M | -410.51M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 107.20M | 426.40M | 101.22M | 120.48M | 368.41M | Total Assets |
| 3.11B | 3.15B | 3.08B | 3.04B | 2.99B | Total Debt |
| 12.02M | 831.29M | 827.04M | 634.55M | 790.31M | Net Debt |
| -95.18M | 404.89M | 725.82M | 514.07M | 421.91M | Total Liabilities |
| 1.00B | 982.68M | 997.86M | 801.27M | 896.34M | Stockholders Equity |
| 2.10B | 2.17B | 2.08B | 2.20B | 2.05B |
| Cash Flow | Free Cash Flow | |||
| 198.13M | 198.13M | 80.81M | -35.29M | -116.81M | Operating Cash Flow |
| 198.13M | 198.13M | 209.38M | 28.37M | -116.70M | Investing Cash Flow |
| 258.08M | 258.08M | -165.72M | -239.69M | 113.79M | Financing Cash Flow |
| -97.52M | -119.72M | -49.17M | -42.10M | -445.92M |
Sunstone Hotel Technical Analysis
Negative
9.93
Price Trends
11.24
Negative
11.05
Negative
10.54
Negative
Market Momentum
-0.30
Positive
27.55
Positive
29.80
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHO, the sentiment is Negative. The current price of 9.93 is below the 20-day moving average (MA) of 10.71, below the 50-day MA of 11.24, and below the 200-day MA of 10.54, indicating a bearish trend. The MACD of -0.30 indicates Positive momentum. The RSI at 27.55 is Positive, neither overbought nor oversold. The STOCH value of 29.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SHO.
Sunstone Hotel Risk Analysis
Sunstone Hotel disclosed 65 risk factors in its most recent earnings report. Sunstone Hotel reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Sunstone Hotel Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $10.72B | 16.06 | 10.53% | 5.03% | 7.02% | -4.78% | |
72 Outperform | $3.40B | 16.53 | 6.50% | 6.77% | 6.52% | 14.45% | |
64 Neutral | $2.00B | 74.09 | 2.01% | 3.35% | -8.18% | -85.42% | |
61 Neutral | $1.38B | ― | -0.16% | 0.35% | 2.35% | 57.81% | |
61 Neutral | $4.74B | 19.16 | -3.00% | 7.93% | 6.45% | -20.78% | |
58 Neutral | $1.36B | 33.76 | 2.94% | 5.41% | 3.31% | -15.16% | |
54 Neutral | $1.30B | 84.75 | 1.24% | 3.67% | 1.33% | -10.65% |
* Real Estate Sector Average
Performance Comparison
SHO
Sunstone Hotel
9.93
-0.85
-7.88%
HST
Host Hotels & Resorts
15.34
-4.47
-22.56%
PEB
Pebblebrook Hotel
10.95
-4.86
-30.74%
RLJ
RLJ Lodging
8.93
-2.45
-21.53%
XHR
Xenia Hotels & Resorts
12.87
-1.59
-11.00%
APLE
Apple Hospitality REIT
13.70
-1.72
-11.15%
Sunstone Hotel Earnings Call Summary
Earnings Call Date: Feb 21, 2025 | % Change Since: -12.12% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
Sunstone Hotel Investors had a strong financial year in 2024, achieving high-end guidance metrics and successful asset acquisition. Despite challenges such as the labor strike in San Diego and delayed Miami Beach renovations, the company maintains a strong liquidity position and expects continued growth in 2025.Highlights
Strong Financial Performance
Sunstone Hotel Investors reported full-year adjusted EBITDA of $230 million and FFO of $0.80 per diluted share, both at the high end of guidance.
Successful Asset Acquisition
Acquired the 630-room Hyatt Regency San Antonio Riverwalk for $222 million, reflecting a 9% capitalization rate on 2024 earnings.
Capital Return to Shareholders
Returned nearly $100 million to shareholders through dividends and share repurchases in 2024, with a total of $190 million repurchased over three years.
Positive Market Trends
Group business remained strong with notable RevPAR and group room nights growth across various locations like Westin Washington D.C. and Hyatt Regency San Antonio.
Strong Liquidity Position
Ended the year with nearly $700 million in total liquidity, with no debt maturities until 2026.
Positive Outlook for 2025
Expecting total portfolio RevPAR growth of 7% to 10% and EBITDAre growth of 12% in 2025.
Lowlights
Challenges in Miami Beach
The Andaz Miami Beach opening faced delays due to permitting and approval processes.
Labor Strike Impact
San Diego experienced lingering disruption due to a labor strike, affecting performance.
Higher Wage and Benefit Costs
Expecting wage and benefits increase to be at the higher end of 4% to 6% in 2025 due to recent collective bargaining agreements.
Company Guidance
During the Sunstone Hotel Investors Fourth Quarter Earnings Call, guidance for 2025 was detailed with various performance metrics. The company anticipates total portfolio RevPAR growth of 7% to 10% for 2025, driven by strong group business, steady corporate travel, and potential leisure rebound in key markets such as Maui. Adjusted EBITDAre is projected to range from $245 million to $270 million, representing an annual growth of 12%, while adjusted FFO per diluted share is expected to be between $0.86 and $0.98, indicating a 15% increase. Key assumptions include a 3% to 6% RevPAR growth excluding the Andaz Miami Beach, which is projected to add nearly four points of growth. The company plans to invest $80 million to $100 million in capital projects, with less earnings disruption anticipated. Sunstone’s balance sheet remains robust, with nearly $700 million in liquidity and a net debt leverage ratio projected to decrease to 3.9 times by year-end. The company expects a balanced distribution of quarterly growth and plans to maintain capital recycling strategies while considering asset sales, acquisitions, or share repurchases.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.