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Sunstone Hotel Investors (SHO)
NYSE:SHO
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Sunstone Hotel
(NYSE:SHO)
63Neutral
Positive Factors
Acquisition Interest
Sunstone Hotel Investors received interest in being acquired by Trinity Investments at a significant premium to its recent trading price.
Earnings
Sunstone Hotel Investors reported stronger total revenues and RevPAR in the fourth quarter, coming in above market estimates and consensus.
Financial Stability
The company has the second lowest leverage in its group, which is favorable for its financial stability.
Negative Factors
Acquisition Uncertainty
The two companies are not in active discussions, which casts uncertainty on the takeover report.
EBITDA Guidance
Sunstone Hotel Investors' 2025 EBITDA guidance came in below consensus, potentially putting pressure on the stock.
Labor Impact
The company's fourth-quarter EBITDA margins were lower, impacted by labor activity, which led to weaker margins despite strong revenue performance.
Sunstone Hotel (SHO) vs. S&P 500 (SPY)
Market Cap
$1.67B
Dividend Yield4.18%
Average Volume (3M)2.88M
Price to Earnings (P/E)88.5
Beta (1Y)0.94
Revenue Growth-3.90%
EPS Growth-89.21%
CountryUS
Employees36
SectorReal Estate
Sector Strength81
IndustryREIT - Hotel & Motel
Share Statistics
EPS (TTM)0.01
Shares Outstanding201,198,900
10 Day Avg. Volume2,689,844
30 Day Avg. Volume2,881,048
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.73
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit6.83
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$9.50Price Target Upside10.21% Upside
Rating ConsensusHold
Number of Analyst Covering7
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 solid equity position 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. Overall, the company is well-positioned financially but faces challenges in profitability and 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 |
| 421.74M | 476.46M | 463.50M | 218.18M | 16.22M | EBIT |
| 79.13M | 245.22M | 104.59M | -85.44M | -244.11M | EBITDA |
| 203.64M | 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 |
| 853.07M | 831.29M | 827.04M | 634.55M | 790.31M | Net Debt |
| 745.87M | 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 | |||
| 170.38M | 198.13M | 80.81M | -35.29M | -116.81M | Operating Cash Flow |
| 170.38M | 198.13M | 209.38M | 28.37M | -116.70M | Investing Cash Flow |
| -386.28M | 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
Neutral
8.62
Price Trends
9.03
Negative
10.22
Negative
10.20
Negative
Market Momentum
-0.15
Negative
51.27
Neutral
48.70
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHO, the sentiment is Neutral. The current price of 8.62 is above the 20-day moving average (MA) of 8.31, below the 50-day MA of 9.03, and below the 200-day MA of 10.20, indicating a neutral trend. The MACD of -0.15 indicates Negative momentum. The RSI at 51.27 is Neutral, neither overbought nor oversold. The STOCH value of 48.70 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SHO.
Sunstone Hotel Risk Analysis
Sunstone Hotel disclosed 63 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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $1.54B | 38.47 | 3.22% | 2.24% | 3.73% | -44.49% | |
71 Outperform | $1.11B | 51.52 | 1.83% | 4.33% | 3.57% | 12.66% | |
66 Neutral | $1.98B | 17.11 | 3.46% | 9.63% | -3.68% | 35.35% | |
64 Neutral | $1.06B | ― | -0.33% | 0.41% | 2.18% | 56.00% | |
63 Neutral | $1.67B | 88.45 | 1.66% | 4.18% | -3.90% | -89.21% | |
60 Neutral | $2.81B | 11.04 | 0.20% | 8508.34% | 6.12% | -16.66% | |
58 Neutral | $1.06B | 26.73 | 2.92% | 7.46% | 2.82% | -8.08% |
* Real Estate Sector Average
Performance Comparison
SHO
Sunstone Hotel
8.62
-1.26
-12.75%
DRH
Diamondrock
7.58
-0.54
-6.65%
PEB
Pebblebrook Hotel
9.74
-5.01
-33.97%
RLJ
RLJ Lodging
7.37
-2.38
-24.41%
XHR
Xenia Hotels & Resorts
11.56
-2.76
-19.27%
PK
Park Hotels & Resorts
10.38
-3.92
-27.41%
Sunstone Hotel Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q1-2025)
| % Change Since: 0.47%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong performances in specific markets and successful hotel conversions, with a robust share repurchase strategy. However, challenges in Wailea and San Diego, macroeconomic uncertainties, and the delayed opening of Andaz Miami Beach tempered the outlook.Q1-2025 Updates
Positive Updates
Strong Performance in Specific Markets
The inauguration in Washington D.C. drove a 24% increase in RevPAR, and hotels in New Orleans grew RevPAR by 25% due to the Super Bowl. San Francisco experienced a 9% RevPAR growth due to a better citywide calendar.
Successful Hotel Conversions and Openings
The Andaz Miami Beach opened on May 3, expected to deliver growth. The Marriott Long Beach Downtown posted a 145% increase in RevPAR. The company is excited about the Andaz Miami Beach's potential for 2026 and beyond.
Robust Share Repurchase and Strong Balance Sheet
Sunstone repurchased $21 million of stock at $8.90 per share. The balance sheet remains strong with net leverage, including preferred equity, at 4.5x trailing EBITDA. Total liquidity equates to nearly $650 million.
Positive Outlook for San Francisco and Wailea
San Francisco showed strong business transient demand, with positive sentiment and strong pace growth expected in future years. Wailea Beach Resort's group production was up nearly 20% in the first quarter compared to the prior year.
Negative Updates
Challenges in Wailea and San Diego Markets
Softer-than-expected performance in Wailea due to recovery from fires and Kaanapali reopening. San Diego experienced less robust transient demand, impacting first-quarter results.
Macroeconomic Uncertainty and Limited Forward Visibility
Operating fundamentals moderated due to macroeconomic uncertainty and declining business and consumer confidence, leading to a cautious full-year outlook adjustment.
Delayed Opening of Andaz Miami Beach
The opening of Andaz Miami Beach was delayed, affecting expected EBITDA contributions for the year, with a revised projection of $6-7 million in EBITDA.
Company Guidance
During the Sunstone Hotel Investors First Quarter 2025 Earnings Call, the company provided updated guidance for the year, reflecting some adjustments to their financial outlook. The revised outlook anticipates total portfolio RevPAR growth between 4% and 7% compared to 2024, with adjusted EBITDAre expected to range from $235 million to $260 million. Adjusted FFO per diluted share is forecasted to lie between $0.82 and $0.94, translating to annual growth rates of 8% for EBITDA and 10% for FFO. The opening of the Andaz Miami Beach, though slightly delayed, is expected to contribute significantly to earnings, particularly in the fourth quarter. The company also discussed the impact of macroeconomic uncertainty on certain markets, such as Wailea and San Diego, and highlighted their capital recycling strategy, including potential asset sales to fund share repurchases, which have already amounted to $21 million at a blended repurchase price of $8.90 per share.Sunstone Hotel Corporate Events
Executive/Board ChangesShareholder MeetingsStock BuybackBusiness Operations and StrategyFinancial Disclosures
Sunstone Hotel Opens Renovated Andaz Miami Beach
Neutral
May 6, 2025
On May 1, 2025, Sunstone Hotel Investors held its Annual Meeting of Stockholders, where key decisions included the election of directors and the approval of executive compensation and audit appointments. The company reported a decrease in net income for the first quarter of 2025 compared to the previous year, but saw increases in RevPAR and Adjusted EBITDAre. Sunstone opened the newly renovated Andaz Miami Beach, marking a significant milestone in its portfolio enhancement strategy. The company also continued its stock repurchase program and extended a term loan maturity, reflecting its focus on financial flexibility and shareholder returns.
Spark’s Take on SHO Stock
According to Spark, TipRanks’ AI Analyst, SHO is a Neutral.
Sunstone Hotel’s stock reflects a mixed outlook. The financial performance is stable, supported by a strong balance sheet but challenged by declining profitability. Technical analysis suggests a bearish trend, while the stock appears overvalued based on its P/E ratio. The optimistic guidance from the earnings call provides a positive forward-looking sentiment, but operational challenges remain. Overall, the stock’s score is weighed down by valuation concerns and technical indicators.
To see Spark’s full report on SHO stock, click here.
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.