SUNSTONE HOTEL INVESTORS INC (SHO) Stock Fundamental Analysis
NYSE:SHO - New York Stock Exchange, Inc. - US8678921011 - REIT - Currency: USD
We assign a fundamental rating of 4 out of 10 to SHO. SHO was compared to 130 industry peers in the Diversified REITs industry. The financial health of SHO is average, but there are quite some concerns on its profitability. SHO has a expensive valuation and it also scores bad on growth.
1. Profitability
1.1 Basic Checks
SHO had positive earnings in the past year.
In the past year SHO had a positive cash flow from operations.
Of the past 5 years SHO 4 years were profitable.
Of the past 5 years SHO 4 years had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 0.64%, SHO is in line with its industry, outperforming 50.77% of the companies in the same industry.
SHO has a Return On Equity of 0.95%. This is comparable to the rest of the industry: SHO outperforms 46.15% of its industry peers.
The Return On Invested Capital of SHO (2.09%) is worse than 65.38% 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 3.16%.
| Industry Rank | Sector 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
1.3 Margins
SHO has a Profit Margin of 2.14%. This is comparable to the rest of the industry: SHO outperforms 45.38% of its industry peers.
SHO's Profit Margin has declined in the last couple of years.
SHO's Operating Margin of 8.43% is on the low side compared to the rest of the industry. SHO is outperformed by 82.31% of its industry peers.
SHO's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 60.93%, SHO is doing worse than 66.92% of the companies in the same industry.
In the last couple of years the Gross Margin of SHO has remained more or less at the same level.
| Industry Rank | Sector 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%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so SHO is destroying value.
SHO has less shares outstanding than it did 1 year ago.
The number of shares outstanding for SHO has been reduced compared to 5 years ago.
SHO has a worse debt/assets ratio than last year.
2.2 Solvency
SHO has an Altman-Z score of 1.17. This is a bad value and indicates that SHO is not financially healthy and even has some risk of bankruptcy.
SHO has a better Altman-Z score (1.17) than 82.31% of its industry peers.
SHO has a Debt/Equity ratio of 0.41. This is a healthy value indicating a solid balance between debt and equity.
SHO's Debt to Equity ratio of 0.41 is amongst the best of the industry. SHO outperforms 93.08% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 1.17 |
ROIC/WACC0.24
WACC8.73%
2.3 Liquidity
A Current Ratio of 1.27 indicates that SHO should not have too much problems paying its short term obligations.
The Current ratio of SHO (1.27) is better than 63.08% of its industry peers.
SHO has a Quick Ratio of 1.27. This is a normal value and indicates that SHO is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of SHO (1.27) is better than 63.85% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.27 | ||
| Quick Ratio | 1.27 |
3. Growth
3.1 Past
The earnings per share for SHO have decreased strongly by -66.67% in the last year.
SHO shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -23.38% yearly.
SHO shows a decrease in Revenue. In the last year, the revenue decreased by -3.90%.
The Revenue has been decreasing by -4.07% on average over the past years.
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
The Revenue is expected to grow by 4.03% on average over the next years.
EPS Next Y-1.4%
EPS Next 2Y19.21%
EPS Next 3Y24.89%
EPS Next 5YN/A
Revenue Next Year7.13%
Revenue Next 2Y5.28%
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 88.10, which means the current valuation is very expensive for SHO.
The rest of the industry has a similar Price/Earnings ratio as SHO.
The average S&P500 Price/Earnings ratio is at 26.98. SHO is valued rather expensively when compared to this.
A Price/Forward Earnings ratio of 44.28 indicates a quite expensive valuation of SHO.
Compared to the rest of the industry, the Price/Forward Earnings ratio of SHO is on the same level as its industry peers.
SHO's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 21.49.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 88.1 | ||
| Fwd PE | 44.28 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of SHO indicates a somewhat cheap valuation: SHO is cheaper than 66.15% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.37 |
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%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 4.05%, SHO is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 6.64, SHO is paying slightly less dividend.
SHO's Dividend Yield is rather good when compared to the S&P500 average which is at 2.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.05% |
5.2 History
The dividend of SHO decreases each year by -9.74%.
SHO has been paying a dividend for at least 10 years, so it has 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
5.3 Sustainability
427.55% of the earnings are spent on dividend by SHO. This is not a sustainable payout ratio.
DP427.55%
EPS Next 2Y19.21%
EPS Next 3Y24.89%
NYSE:SHO (6/30/2025, 10:25:57 AM)
8.81
-0.02 (-0.23%)
Chartmill FA Rating
GICS SectorReal Estate
GICS IndustryGroupEquity Real Estate Investment Trusts (REITs)
GICS IndustryDiversified REITs
Earnings (Last)
Earnings (Next)
Inst Owners102.02%
Inst Owner Change0.4%
Ins Owners1.21%
Ins Owner Change6.39%
Market Cap1.75B
Analysts74.29
Price Target10.05 (14.07%)
Short Float %7.37%
Short Ratio5.07
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.05% |
Yearly Dividend0.45
Dividend Growth(5Y)-9.74%
DP427.55%
Div Incr Years2
Div Non Decr Years2
Ex-Date
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)-2.39%
PT rev (3m)-14.35%
EPS NQ rev (1m)2.17%
EPS NQ rev (3m)-24.93%
EPS NY rev (1m)29.55%
EPS NY rev (3m)-26.91%
Revenue NQ rev (1m)-0.94%
Revenue NQ rev (3m)-3.44%
Revenue NY rev (1m)-1.01%
Revenue NY rev (3m)-2.66%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 88.1 | ||
| Fwd PE | 44.28 | ||
| P/S | 1.9 | ||
| P/FCF | N/A | ||
| P/OCF | 10.69 | ||
| P/B | 0.84 | ||
| P/tB | 0.84 | ||
| EV/EBITDA | 12.37 |
EPS(TTM)0.1
EY1.14%
EPS(NY)0.2
Fwd EY2.26%
FCF(TTM)-0.33
FCFYN/A
OCF(TTM)0.82
OCFY9.36%
SpS4.64
BVpS10.45
TBVpS10.45
PEG (NY)N/A
PEG (5Y)N/A
Profitability
| Industry Rank | Sector 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 Rank | Sector 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 | 1.17 |
F-Score4
WACC8.73%
ROIC/WACC0.24
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 Year7.13%
Revenue Next 2Y5.28%
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%