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Diamondrock (DRH)
NYSE:DRH
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Diamondrock
(NYSE:DRH)60Neutral
Positive Factors
Dividend Strategy
DRH declared a $0.23/sh Q4 dividend ($0.03/sh regular, $0.20/sh stub) and expects its 2025 dividend to be at least in line with its '24 annual.
Market Performance
Shares of DRH have outperformed its lodging peers YTD (-1.7% vs. the group of -8.7%).
Negative Factors
Operational Performance
We do not expect operational outperformance by the company in 2025.
Diamondrock (DRH) vs. S&P 500 (SPY)
Market Cap
$1.70B
Dividend Yield1.46%
Average Volume (3M)1.81M
Price to Earnings (P/E)44.8
Beta (1Y)1.18
Revenue Growth5.12%
EPS Growth-49.88%
CountryUS
Employees33
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)0.18
Shares Outstanding208,089,570
10 Day Avg. Volume2,658,752
30 Day Avg. Volume1,807,656
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.54
Price to Cash Flow (P/CF)6.90
P/FCF Ratio11.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$9.69Price Target Upside19.48% Upside
Rating ConsensusHold
Number of Analyst Covering5
Diamondrock Business Overview & Revenue Model
Company DescriptionDiamondrock Hospitality Company (DRH) is a self-advised real estate investment trust (REIT) that focuses on owning and managing premium hotels and resorts in North America. The company primarily operates in the hospitality and tourism sectors, providing high-quality lodging experiences under well-known brands such as Marriott, Hilton, and Hyatt. Diamondrock's portfolio consists of a mix of properties located in major urban markets, resort destinations, and convention centers, catering to both business and leisure travelers.
How the Company Makes MoneyDiamondrock Hospitality Company makes money primarily through the revenue generated from its hotel and resort properties. This includes income from room rentals, food and beverage sales, and other guest services provided at their locations. The company also benefits from strategic partnerships with major hotel brands, which allow them to leverage brand recognition and loyalty programs to drive occupancy rates and pricing power. Additionally, Diamondrock may earn revenue through asset management and sales of properties when it aligns with their strategic objectives. As a REIT, the company is structured to distribute the majority of its taxable income to shareholders in the form of dividends, thus attracting investors seeking stable income streams.
Diamondrock Financial Statement Overview
Summary
DiamondRock's financials show improvements in revenue and operational efficiency, with robust equity and reduced leverage, enhancing stability. However, low profitability remains a concern despite better cash flow.Income Statement
The income statement shows a moderate financial performance with a gross profit margin of 100%, indicating significant improvement in cost management. However, the net profit margin of 3.38% for 2024 reflects challenges in profitability. Revenue growth from 2023 to 2024 was 5.12%, which is a positive trend compared to previous years. The EBIT margin stood at 9.82%, while the EBITDA margin was 19.10%, both showing reasonable operational efficiency. Improvements are visible, but net income remains relatively low.62
Positive
Balance Sheet
The balance sheet indicates a strong equity position with a debt-to-equity ratio of 0, due to the absence of total debt in 2024, which is a significant improvement. Return on Equity (ROE) is 2.40%, showing modest returns on shareholder investments. The equity ratio is 50.14%, suggesting a stable financial structure with half of the assets financed by equity. The overall financial stability seems robust with reduced leverage risk.75
Positive
Cash Flow
Cash flow analysis shows positive developments. Free cash flow grew by 20.48% from 2023 to 2024, highlighting improved cash generation. The operating cash flow to net income ratio is 5.87, indicating strong cash flow from operations relative to net income. The free cash flow to net income ratio is 3.73, suggesting efficient cash generation despite low net income. Cash flow stability is enhanced but requires continued attention to sustain growth.68
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.13B | 1.07B | 1.00B | 567.13M | 299.49M | Gross Profit |
| 1.13B | 293.11M | 360.87M | 134.34M | -41.14M | EBIT |
| 110.97M | 261.06M | 164.11M | -29.10M | -196.57M | EBITDA |
| 228.90M | 263.33M | 272.96M | 73.86M | -202.51M | Net Income Common Stockholders |
| 38.23M | 86.34M | 109.33M | -195.41M | -396.03M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 81.38M | 121.59M | 67.56M | 38.62M | 111.80M | Total Assets |
| 3.17B | 3.24B | 3.21B | 2.97B | 3.15B | Total Debt |
| 1.18B | 1.29B | 1.30B | 1.18B | 1.15B | Net Debt |
| -81.38M | 1.17B | 1.23B | 1.14B | 1.04B | Total Liabilities |
| 1.57B | 1.59B | 1.61B | 1.44B | 1.43B | Stockholders Equity |
| 1.59B | 1.64B | 1.59B | 1.52B | 1.71B |
| Cash Flow | Free Cash Flow | |||
| 142.82M | 118.55M | -43.36M | -49.44M | -173.32M | Operating Cash Flow |
| 224.41M | 237.56M | 206.24M | -2.31M | -83.69M | Investing Cash Flow |
| -112.12M | -120.85M | -248.60M | -62.20M | -78.97M | Financing Cash Flow |
| -150.67M | -56.73M | 74.03M | 5.17M | 117.71M |
Diamondrock Technical Analysis
Negative
8.11
Price Trends
8.73
Negative
8.82
Negative
8.50
Negative
Market Momentum
-0.18
Positive
31.77
Neutral
13.91
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRH, the sentiment is Negative. The current price of 8.11 is below the 20-day moving average (MA) of 8.45, below the 50-day MA of 8.73, and below the 200-day MA of 8.50, indicating a bearish trend. The MACD of -0.18 indicates Positive momentum. The RSI at 31.77 is Neutral, neither overbought nor oversold. The STOCH value of 13.91 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DRH.
Diamondrock Risk Analysis
Diamondrock disclosed 64 risk factors in its most recent earnings report. Diamondrock 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
Diamondrock 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 | $11.28B | 16.29 | 10.55% | 4.96% | 7.02% | -4.78% | |
68 Neutral | $2.48B | 12.16 | 5.82% | 8.33% | -3.67% | 122.68% | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% | |
61 Neutral | $1.42B | ― | -0.16% | 0.33% | 2.35% | 57.81% | |
60 Neutral | $1.70B | 44.81 | 2.40% | 1.46% | 5.12% | -49.88% | |
58 Neutral | $1.41B | 33.83 | 1.88% | 5.32% | 3.31% | -15.16% | |
54 Neutral | $1.34B | 85.53 | 1.30% | 3.58% | 1.33% | -10.65% |
* Real Estate Sector Average
Performance Comparison
DRH
Diamondrock
8.11
-1.09
-11.85%
HST
Host Hotels & Resorts
15.85
-4.07
-20.43%
PEB
Pebblebrook Hotel
11.84
-4.33
-26.78%
RLJ
RLJ Lodging
9.33
-2.20
-19.08%
XHR
Xenia Hotels & Resorts
13.18
-1.96
-12.95%
PK
Park Hotels & Resorts
11.75
-4.02
-25.49%
Diamondrock Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -0.73% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted a strong performance in urban hotels and group room revenues, supported by strategic capital expenditures and dividend increases. However, challenges persist in the Florida resort market and with upcoming loan maturities in a high-interest environment. The company remains cautious but optimistic about future growth opportunities.Highlights
Strong Urban Hotel Performance
Urban hotels saw an 8.2% increase in RevPAR with a 5.4% increase in average daily rate. December RevPAR was up 13.2%, with notable performances in Chicago, Salt Lake, San Diego, and Boston.
Group Room Revenue Growth
Fourth quarter group room revenues increased 8.1% over 2023, contributing to a 6.4% increase in total food and beverage revenue at urban hotels.
Corporate and Hotel Adjusted EBITDA Growth
Hotel adjusted EBITDA in the fourth quarter was $75.9 million, reflecting 16.4% growth over 2023. Corporate adjusted EBITDA was $68.7 million, an almost 20% growth over 2023.
Successful Capital Expenditure Projects
Completed renovations at several hotels, including Bourbon Orleans and Westin San Diego Bay View, leading to increased revenue and positive ROI.
Dividend Increase
Announced an increase in regular quarterly dividends from $0.03 to $0.08 per share in 2025, with a potential additional stub dividend.
Lowlights
Florida Resort Challenges
RevPAR at Florida resorts declined 5.8%, attributed to lingering effects from the pandemic and price inflation.
Resort Hotel RevPAR Decline
Fourth quarter results at resort hotels were mixed, with RevPAR declining 150 basis points.
Interest Rate Concerns
Maturing loans totaling nearly $300 million in 2025 with a weighted average cost of approximately 4.2%. Expected refinancing at higher rates.
Market Uncertainty
General market uncertainty, including inflation and unemployment pressures, affecting consumer spending and leisure travel.
Company Guidance
During DiamondRock's fourth quarter 2024 earnings call, the company reported several key financial metrics and provided guidance for 2025. The company achieved a 5.5% increase in comparable total RevPAR over 2023, with urban hotels seeing an 8.2% rise in RevPAR on a 5.4% increase in average daily rate. December RevPAR grew by 13.2% in urban markets, driven by favorable calendar shifts. However, resort hotels saw a 150 basis point decline in RevPAR, with Florida resorts experiencing a 5.8% drop. Group room revenues increased by 8.1% over 2023. Hotel adjusted EBITDA rose by 16.4% to $75.9 million, while corporate adjusted EBITDA grew by nearly 20% to $68.7 million. Adjusted funds from operations increased by 33% to $0.24 per share. For 2025, DiamondRock expects RevPAR growth of 1% to 3%, with corporate adjusted EBITDA projected between $275 million and $300 million. The company plans to pay regular quarterly dividends of $0.08 per share and anticipates a stub dividend depending on operating income. Additionally, DiamondRock is managing refinancing efforts for maturing loans and a corporate credit facility while maintaining a focus on free cash flow and shareholder returns.Diamondrock Corporate Events
M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
DiamondRock Sells Westin DC City Center for $92M
Positive
Mar 3, 2025
DiamondRock Hospitality Company has announced several strategic moves and financial outcomes for 2024. The company sold the Westin DC City Center in February 2025 for $92 million and acquired the AC Hotel Minneapolis in November 2024 for $30 million. They also invested over $81.6 million in capital improvements, including significant renovations and conversions of several properties. The company’s financial performance exceeded original guidance for 2024, with increases in TRevPAR, Adjusted EBITDA, and AFFO per share. Looking ahead to 2025, DiamondRock anticipates growth in group revenue and urban market demand, with ongoing renovations expected to benefit future performance.
M&A TransactionsBusiness Operations and Strategy
Diamondrock Sells Westin DC Hotel for Strategic Growth
Positive
Feb 19, 2025
On February 19, 2025, DiamondRock Hospitality Company completed the sale of the 410-room Westin Washington, D.C. City Center for $92.0 million. This transaction is a strategic move to enhance long-term earnings and cash flow per share growth by reinvesting the proceeds to create exceptional value for shareholders, marking a significant step in the company’s strategy.
Executive/Board Changes
Diamondrock Expands Board with Expert Stephanie Lepori
Positive
Jan 15, 2025
On January 15, 2025, DiamondRock Hospitality Company expanded its Board of Directors to nine members by appointing Stephanie Lepori, a seasoned executive with nearly three decades of experience in finance and gaming. Lepori, currently serving as Chief Administrative and Accounting Officer at Caesars Entertainment, brings substantial expertise in financial management, strategic growth, and operational leadership, which is expected to enhance the board’s capabilities and support the company’s strategic initiatives. Her appointment reflects DiamondRock’s commitment to strengthening its governance and leveraging industry knowledge to drive future growth.
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.