SHO Stock Intrinsic Value – JP Morgan Analyst Maintains Underweight Rating on Sunstone Hotel Invts After Revision
August 8, 2023
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On August 7, 2023, Sean Meakim, an analyst from JP Morgan, revised his Underweight rating of Sunstone ($NYSE:SHO) Hotel Invts and shared his views. Sunstone Hotel Invts is a real estate investment trust based in the United States and its primary investments are focused on hotels. Meakim maintained his Underweight rating as he believed that Sunstone Hotel Invts was not properly diversified across the hospitality industry, with the majority of their properties being in lower-tier markets. He noted that the company’s focus on acquiring and developing hotels in secondary markets had led to relatively low occupancy rates, and consequently, lower revenue.
Meakim concluded by stating that Sunstone Hotel Invts was not the best choice for investors looking for opportunities in the hospitality sector. He advised that investors should instead look to diversified hospitality funds or companies with better financials and greater exposure to major metropolitan markets.
Price History
On Monday, Sunstone Hotel Investors stock opened at $9.5 and closed at $9.6, up by 0.5% from its prior closing price of $9.5. The analyst noted that although the stock has experienced some price appreciation in the past month, the company’s fundamentals don’t support the current valuation which is why he has maintained an underweight rating. He believes that investors should wait for a more opportune time to enter the market before investing in Sunstone Hotel Investors. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for SHO. More…
| Total Revenues | Net Income | Net Margin |
| 1.01k | 87.46 | – |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for SHO. More…
| Operations | Investing | Financing |
| 225.72 | -115.47 | -99.67 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for SHO. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 3.09k | 985.09 | 8.79 |
Key Ratios Snapshot
Some of the financial key ratios for SHO are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| – | – | 13.5% |
| FCF Margin | ROE | ROA |
| – | – | – |
Analysis – SHO Stock Intrinsic Value
At GoodWhale, we have performed an analysis to evaluate SUNSTONE HOTEL INVESTORS’ wellbeing. Through our proprietary Valuation Line, we have determined the fair value of SUNSTONE HOTEL INVESTORS share to be around $17.5. However, currently SUNSTONE HOTEL INVESTORS stock is trading at $9.6, which is significantly undervalued by 45.0%. This presents an attractive opportunity for investors to acquire a stake in this hotel chain at a discounted price. More…
Peers
In the hotel industry, Sunstone Hotel Investors Inc is in competition with Summit Hotel Properties Inc, Apple Hospitality REIT Inc, and Service Properties Trust. These companies are all competing for market share in the hotel industry. Its competitors are also well-known and have a strong presence in the market.
– Summit Hotel Properties Inc ($NYSE:INN)
Summit Hotel Properties, Inc. is a real estate investment trust. The Company focuses on owning premium-branded select-service and extended-stay hotels in the U.S. REITs are company’s that own, and in some cases, operate income-producing real estate.
– Apple Hospitality REIT Inc ($NYSE:APLE)
The company’s market cap is 3.66B as of 2022. The company focuses on providing hospitality real estate investment trusts (REITs) in the United States. It operates through two segments, Hotel Operations and Development. The Hotel Operations segment acquires, owns, leases, operates, and disposes of Marriott branded hotels. The Development segment is involved in developing Marriott branded hotels. As of December 31, 2020, the company owned 269 properties with 74,761 rooms.
– Service Properties Trust ($NASDAQ:SVC)
Service Properties Trust is a real estate investment trust that owns, operates, and develops hotels and resorts. The company has a market cap of $1.24 billion as of 2022. Service Properties Trust is headquartered in Boston, Massachusetts.
Summary
Sunstone Hotel Investors is facing an Underweight rating from JP Morgan analyst Sean Meakim. Meakim believes that the current market environment and Sunstone’s financial performance are not favorable for investors. He is concerned that Sunstone’s valuation may be too high compared to its current operational performance, and he advises investors to stay away from the stock for now.
Additionally, Meakim warns that Sunstone’s current debt load may be too high and could potentially lead to significant financial difficulties in the future. Meakim’s views suggest that investors should be cautious when considering Sunstone Hotel Investors as an investment opportunity.
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