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SUNSTONE HOTEL INVESTORS INC (SHO) Stock Fundamental Analysis

NYSE:SHO - New York Stock Exchange, Inc. - US8678921011 - REIT - Currency: USD

8.64  -0.11 (-1.26%)

After market: 8.64 0 (0%)

Fundamental Rating

4

We assign a fundamental rating of 4 out of 10 to SHO. SHO was compared to 130 industry peers in the Diversified REITs industry. While SHO seems to be doing ok healthwise, there are quite some concerns on its profitability. SHO is valued expensive and it does not seem to be growing.


Dividend Valuation Growth Profitability Health

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3

1. Profitability

1.1 Basic Checks

SHO had positive earnings in the past year.
SHO had a positive operating cash flow in the past year.
SHO had positive earnings in 4 of the past 5 years.
Of the past 5 years SHO 4 years had a positive operating cash flow.
SHO Yearly Net Income VS EBIT VS OCF VS FCFSHO Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 200M -200M -400M

1.2 Ratios

SHO has a Return On Assets of 0.64%. This is comparable to the rest of the industry: SHO outperforms 50.77% of its industry peers.
SHO has a Return On Equity (0.95%) which is comparable to the rest of the industry.
SHO's Return On Invested Capital of 2.09% is on the low side compared to the rest of the industry. SHO is outperformed by 66.15% of its industry peers.
SHO had an Average Return On Invested Capital over the past 3 years of 2.70%. This is in line with the industry average of 3.15%.
Industry RankSector Rank
ROA 0.64%
ROE 0.95%
ROIC 2.09%
ROA(3y)3.11%
ROA(5y)-0.84%
ROE(3y)4.55%
ROE(5y)-1.22%
ROIC(3y)2.7%
ROIC(5y)N/A
SHO Yearly ROA, ROE, ROICSHO Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 10 -10 -20

1.3 Margins

SHO has a Profit Margin (2.14%) which is in line with its industry peers.
In the last couple of years the Profit Margin of SHO has declined.
The Operating Margin of SHO (8.43%) is worse than 82.31% of its industry peers.
In the last couple of years the Operating Margin of SHO has declined.
The Gross Margin of SHO (60.93%) is worse than 66.92% of its industry peers.
In the last couple of years the Gross Margin of SHO has remained more or less at the same level.
Industry RankSector Rank
OM 8.43%
PM (TTM) 2.14%
GM 60.93%
OM growth 3YN/A
OM growth 5Y-9.81%
PM growth 3Y4.77%
PM growth 5Y-22.47%
GM growth 3Y-0.55%
GM growth 5Y-0.8%
SHO Yearly Profit, Operating, Gross MarginsSHO Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 50 -50 -100 -150

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5

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), SHO is destroying value.
Compared to 1 year ago, SHO has less shares outstanding
The number of shares outstanding for SHO has been reduced compared to 5 years ago.
Compared to 1 year ago, SHO has a worse debt to assets ratio.
SHO Yearly Shares OutstandingSHO Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 50M 100M 150M 200M
SHO Yearly Total Debt VS Total AssetsSHO Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 1B 2B 3B

2.2 Solvency

SHO has an Altman-Z score of 1.14. This is a bad value and indicates that SHO is not financially healthy and even has some risk of bankruptcy.
With an excellent Altman-Z score value of 1.14, SHO belongs to the best of the industry, outperforming 80.77% of the companies in the same industry.
A Debt/Equity ratio of 0.41 indicates that SHO is not too dependend on debt financing.
With an excellent Debt to Equity ratio value of 0.41, SHO belongs to the best of the industry, outperforming 92.31% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.41
Debt/FCF N/A
Altman-Z 1.14
ROIC/WACC0.28
WACC7.5%
SHO Yearly LT Debt VS Equity VS FCFSHO Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 500M 1B 1.5B 2B 2.5B

2.3 Liquidity

A Current Ratio of 1.27 indicates that SHO should not have too much problems paying its short term obligations.
SHO has a better Current ratio (1.27) than 65.38% of its industry peers.
A Quick Ratio of 1.27 indicates that SHO should not have too much problems paying its short term obligations.
SHO has a better Quick ratio (1.27) than 66.15% of its industry peers.
Industry RankSector Rank
Current Ratio 1.27
Quick Ratio 1.27
SHO Yearly Current Assets VS Current LiabilitesSHO Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 200M 400M 600M 800M

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3

3. Growth

3.1 Past

SHO shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -66.67%.
Measured over the past years, SHO shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -23.38% on average per year.
Looking at the last year, SHO shows a decrease in Revenue. The Revenue has decreased by -3.90% in the last year.
Measured over the past years, SHO shows a decrease in Revenue. The Revenue has been decreasing by -4.07% on average per year.
EPS 1Y (TTM)-66.67%
EPS 3Y29.76%
EPS 5Y-23.38%
EPS Q2Q%-80%
Revenue 1Y (TTM)-3.9%
Revenue growth 3Y21.17%
Revenue growth 5Y-4.07%
Sales Q2Q%7.78%

3.2 Future

The Earnings Per Share is expected to grow by 24.89% on average over the next years. This is a very strong growth
Based on estimates for the next years, SHO will show a small growth in Revenue. The Revenue will grow by 4.03% on average per year.
EPS Next Y-1.4%
EPS Next 2Y19.21%
EPS Next 3Y24.89%
EPS Next 5YN/A
Revenue Next Year6.67%
Revenue Next 2Y4.96%
Revenue Next 3Y4.03%
Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
SHO Yearly Revenue VS EstimatesSHO Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 200M 400M 600M 800M 1B
SHO Yearly EPS VS EstimatesSHO Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 0 1 -1 -2

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2

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 86.40, which means the current valuation is very expensive for SHO.
Compared to the rest of the industry, the Price/Earnings ratio of SHO is on the same level as its industry peers.
Compared to an average S&P500 Price/Earnings ratio of 26.82, SHO is valued quite expensively.
SHO is valuated quite expensively with a Price/Forward Earnings ratio of 43.42.
Compared to the rest of the industry, the Price/Forward Earnings ratio of SHO is on the same level as its industry peers.
Compared to an average S&P500 Price/Forward Earnings ratio of 36.21, SHO is valued at the same level.
Industry RankSector Rank
PE 86.4
Fwd PE 43.42
SHO Price Earnings VS Forward Price EarningsSHO Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60 80

4.2 Price Multiples

67.69% of the companies in the same industry are more expensive than SHO, based on the Enterprise Value to EBITDA ratio.
Industry RankSector Rank
P/FCF N/A
EV/EBITDA 12.1
SHO Per share dataSHO EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 2 4 6 8 10

4.3 Compensation for Growth

A more expensive valuation may be justified as SHO's earnings are expected to grow with 24.89% in the coming years.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y19.21%
EPS Next 3Y24.89%

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4

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 4.11%, SHO is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 6.55, SHO is paying slightly less dividend.
SHO's Dividend Yield is rather good when compared to the S&P500 average which is at 2.39.
Industry RankSector Rank
Dividend Yield 4.11%

5.2 History

The dividend of SHO decreases each year by -9.74%.
SHO has paid a dividend for at least 10 years, which is a reliable track record.
SHO has decreased its dividend in the last 3 years.
Dividend Growth(5Y)-9.74%
Div Incr Years2
Div Non Decr Years2
SHO Yearly Dividends per shareSHO Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2022 2023 2024 2025 0.5 1

5.3 Sustainability

SHO pays out 427.55% of its income as dividend. This is not a sustainable payout ratio.
DP427.55%
EPS Next 2Y19.21%
EPS Next 3Y24.89%
SHO Yearly Income VS Free CF VS DividendSHO Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 200M -200M -400M
SHO Dividend Payout.SHO Dividend Payout, showing the Payout Ratio.SHO Dividend Payout.PayoutRetained Earnings

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SUNSTONE HOTEL INVESTORS INC

NYSE:SHO (8/1/2025, 8:04:00 PM)

After market: 8.64 0 (0%)

8.64

-0.11 (-1.26%)

Chartmill FA Rating
GICS SectorReal Estate
GICS IndustryGroupEquity Real Estate Investment Trusts (REITs)
GICS IndustryDiversified REITs
Earnings (Last)05-06 2025-05-06/bmo
Earnings (Next)08-06 2025-08-06/bmo
Inst Owners102.02%
Inst Owner Change0.03%
Ins Owners1.21%
Ins Owner Change3.15%
Market Cap1.72B
Analysts72
Price Target9.83 (13.77%)
Short Float %8.16%
Short Ratio6.68
Dividend
Industry RankSector Rank
Dividend Yield 4.11%
Yearly Dividend0.45
Dividend Growth(5Y)-9.74%
DP427.55%
Div Incr Years2
Div Non Decr Years2
Ex-Date06-30 2025-06-30 (0.09)
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)96.14%
Min EPS beat(2)28.25%
Max EPS beat(2)164.03%
EPS beat(4)3
Avg EPS beat(4)25.3%
Min EPS beat(4)-100%
Max EPS beat(4)164.03%
EPS beat(8)7
Avg EPS beat(8)358.09%
EPS beat(12)11
Avg EPS beat(12)329.11%
EPS beat(16)14
Avg EPS beat(16)252.57%
Revenue beat(2)1
Avg Revenue beat(2)-1.56%
Min Revenue beat(2)-3.82%
Max Revenue beat(2)0.7%
Revenue beat(4)1
Avg Revenue beat(4)-1.9%
Min Revenue beat(4)-3.82%
Max Revenue beat(4)0.7%
Revenue beat(8)4
Avg Revenue beat(8)-0.76%
Revenue beat(12)8
Avg Revenue beat(12)1.84%
Revenue beat(16)11
Avg Revenue beat(16)2.69%
PT rev (1m)-2.17%
PT rev (3m)-5.78%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-33.9%
EPS NY rev (1m)0%
EPS NY rev (3m)-47.07%
Revenue NQ rev (1m)-0.7%
Revenue NQ rev (3m)-4.17%
Revenue NY rev (1m)-0.43%
Revenue NY rev (3m)-2.51%
Valuation
Industry RankSector Rank
PE 86.4
Fwd PE 43.42
P/S 1.86
P/FCF N/A
P/OCF 10.48
P/B 0.83
P/tB 0.83
EV/EBITDA 12.1
EPS(TTM)0.1
EY1.16%
EPS(NY)0.2
Fwd EY2.3%
FCF(TTM)-0.33
FCFYN/A
OCF(TTM)0.82
OCFY9.54%
SpS4.64
BVpS10.45
TBVpS10.45
PEG (NY)N/A
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA 0.64%
ROE 0.95%
ROCE 2.65%
ROIC 2.09%
ROICexc 2.14%
ROICexgc 2.14%
OM 8.43%
PM (TTM) 2.14%
GM 60.93%
FCFM N/A
ROA(3y)3.11%
ROA(5y)-0.84%
ROE(3y)4.55%
ROE(5y)-1.22%
ROIC(3y)2.7%
ROIC(5y)N/A
ROICexc(3y)2.94%
ROICexc(5y)N/A
ROICexgc(3y)2.94%
ROICexgc(5y)N/A
ROCE(3y)3.42%
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5Y-13.98%
ROICexc growth 3YN/A
ROICexc growth 5Y-13.98%
OM growth 3YN/A
OM growth 5Y-9.81%
PM growth 3Y4.77%
PM growth 5Y-22.47%
GM growth 3Y-0.55%
GM growth 5Y-0.8%
F-Score4
Asset Turnover0.3
Health
Industry RankSector Rank
Debt/Equity 0.41
Debt/FCF N/A
Debt/EBITDA 4.09
Cap/Depr N/A
Cap/Sales N/A
Interest Coverage 1.67
Cash Conversion 79.75%
Profit Quality N/A
Current Ratio 1.27
Quick Ratio 1.27
Altman-Z 1.14
F-Score4
WACC7.5%
ROIC/WACC0.28
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-66.67%
EPS 3Y29.76%
EPS 5Y-23.38%
EPS Q2Q%-80%
EPS Next Y-1.4%
EPS Next 2Y19.21%
EPS Next 3Y24.89%
EPS Next 5YN/A
Revenue 1Y (TTM)-3.9%
Revenue growth 3Y21.17%
Revenue growth 5Y-4.07%
Sales Q2Q%7.78%
Revenue Next Year6.67%
Revenue Next 2Y4.96%
Revenue Next 3Y4.03%
Revenue Next 5YN/A
EBIT growth 1Y-30%
EBIT growth 3YN/A
EBIT growth 5Y-13.48%
EBIT Next Year209.81%
EBIT Next 3Y51.43%
EBIT Next 5YN/A
FCF growth 1Y-668.76%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-32.68%
OCF growth 3Y81.77%
OCF growth 5Y-10.15%