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Diamondrock Hospitality (DRH)
:DRH
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Diamondrock
(NYSE:DRH)
Select Model
Select Model
Rating:63Neutral
Price Target:
$8.50
â–²(5.72% Upside)
Diamondrock's overall stock score is driven by its solid financial performance and proactive financial management, as highlighted in the earnings call. However, mixed technical indicators and valuation concerns, along with challenges in revenue growth and profitability, temper the overall outlook.
Positive Factors
Cash Flow Generation
The increase in free cash flow per share indicates improved cash generation, enhancing financial flexibility and supporting potential investments or shareholder returns.
Urban Portfolio Performance
Strong RevPAR growth in key urban markets highlights Diamondrock's ability to capitalize on high-demand areas, supporting long-term revenue stability and growth.
Successful Refinancing
The refinancing enhances liquidity and financial stability, allowing Diamondrock to pursue strategic opportunities and manage debt more effectively.
Negative Factors
Resort Portfolio Decline
The decline in the resort portfolio's RevPAR indicates challenges in this segment, potentially impacting overall revenue and profitability if not addressed.
Leisure Transient Revenue Decline
A decline in leisure transient revenue suggests potential weaknesses in attracting leisure travelers, which could affect revenue diversification and growth.
Anticipated RevPAR Decline
Expected RevPAR decline indicates potential revenue challenges, necessitating strategic adjustments to sustain growth and profitability in the near term.
Diamondrock (DRH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.67B
Dividend Yield5.22%
Average Volume (3M)2.74M
Price to Earnings (P/E)29.2
Beta (1Y)1.03
Revenue Growth1.72%
EPS Growth-3.49%
CountryUS
Employees31
SectorReal Estate
Sector Strength53
IndustryREIT - Hotel & Motel
Share Statistics
EPS (TTM)0.18
Shares Outstanding204,954,590
10 Day Avg. Volume3,305,556
30 Day Avg. Volume2,743,777
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.56
Enterprise Value/Revenue2.32
Enterprise Value/Gross Profit3.11
Enterprise Value/Ebitda10.57
Forecast
1Y Price Target
$9.09Price Target Upside13.06% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Diamondrock Business Overview & Revenue Model
Company DescriptionDiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations. The Company owns 31 premium quality hotels with over 10,000 rooms. The Company has strategically positioned its hotels to be operated both under leading global brand families as well as unique boutique hotels in the lifestyle segment.
How the Company Makes MoneyDiamondRock generates revenue primarily through the operation of its hotel properties, which includes both room rentals and ancillary services such as food and beverage, event hosting, and other guest services. The company earns income from its hotels by leasing them to third-party hotel operators, who manage daily operations and guest services, typically under well-known hotel brands. Additionally, DiamondRock may receive management fees from these operators based on the hotels' performance. The company's revenue model is further supported by strategic partnerships with established hotel brands and operators, which enhance its market presence and operational efficiency. Revenue is also influenced by factors such as hotel occupancy rates, average daily rates (ADR), and seasonal travel trends, contributing to its overall financial performance.
Diamondrock Earnings Call Summary
Earnings Call Date:Aug 07, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed performance with strong achievements in the urban portfolio and refinancing efforts, but significant challenges in the resort portfolio and overall RevPAR outlook for the near term. The focus on strategic refinancing and share repurchases demonstrates proactive financial management, yet the challenges in the resort segment and anticipated RevPAR declines suggest caution.Q2-2025 Updates
Positive Updates
Urban Portfolio Performance
The urban portfolio achieved a 3% RevPAR growth with strong performances in San Francisco, San Diego, New York, Boston, and Chicago. Food and beverage revenues increased over 5%, with a total expense growth of 5.7%, which, excluding the property tax increase in Chicago, would have resulted in a margin growth of approximately 95 basis points.
Successful Refinancing and Share Repurchase Program
DiamondRock successfully refinanced its senior unsecured credit facility, increasing its size to $1.5 billion. The company has repurchased 3.6 million shares year-to-date for $27.3 million at a cap rate of just under 10% and has $146.8 million remaining on its share repurchase authorization.
Strong Group Revenue Setup for 2026
Group revenue pace for 2026 is currently up 12%, providing a strong setup for future performance. Group typically accounts for approximately 30% of DiamondRock's portfolio revenue.
Food and Beverage Profit Growth
Food and beverage revenues increased by 3.1%, with profit growing over 6% and margins increasing by 105 basis points due to strategic menu pricing and operational refinements.
Increase in Free Cash Flow Per Share
Free cash flow per share for the trailing 12 months increased approximately 4.5% to $0.63 per share.
Negative Updates
Resort Portfolio Decline
Comparable RevPAR in the resort portfolio declined by 6.3%, with a total RevPAR decline of 3.9%. The opening of the Cliffs at L'Auberge in Sedona was delayed by 12 weeks, impacting performance.
Leisure Transient Revenue Decline
Leisure transient revenue declined by 1.6% during the quarter.
Challenges in Group Conversion Rates
Despite improvements in group lead volumes, conversion rates have not yet reaccelerated, highlighting continued reticence to commit in an uncertain environment.
Expense Growth and Margin Contraction
Overall expenses increased by 2.6%, with hotel EBITDA margins contracting by 97 basis points. Excluding the Chicago tax increase, margins would have increased by 30 basis points.
Anticipated RevPAR Decline in Q3
The company expects total portfolio RevPAR to decline in the low single digits in the third quarter, with difficult comparisons due to strong performance in the second half of 2024.
Company Guidance
During the DiamondRock Hospitality Company's Second Quarter 2025 Earnings Call, CFO Briony Quinn provided guidance highlighting several key financial metrics. The company's comparable RevPAR growth was 0.1%, driven by a 1.1% increase in rate, despite an 80 basis point decline in occupancy. Total RevPAR growth reached 1.1%, bolstered by a 4.2% increase in out-of-room revenues per occupied room, which hit a quarterly high of $160. Group room revenue increased by 0.8%, business transient revenue by 4.2%, although leisure transient revenue declined by 1.6%. Food and beverage revenues rose by 3.1%, with F&B profits growing over 6% and margins increasing by 105 basis points. Operating expenses grew by 0.7%, excluding a significant property tax increase in Chicago, leading to a hotel EBITDA margins contraction of 97 basis points. Corporate adjusted EBITDA was reported at $90.5 million, and adjusted FFO per share was $0.35. Looking forward, the guidance expects total portfolio RevPAR to decline in low single digits for the third quarter, with a continued focus on cost management and capital efficiency. The company also aims to leverage its unencumbered assets and flexible debt structure to capitalize on potential opportunities such as share repurchases and asset dispositions.Diamondrock Financial Statement Overview
Summary
Diamondrock's financial statements reveal a recovering entity with improvements in revenue, operational efficiency, and cash flow, though profitability remains a challenge. The balance sheet shows strengthened equity and reduced leverage, enhancing financial stability. Continued focus on boosting net income and maintaining cash flow growth will be critical for future success.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.65
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.70
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.60
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.12B | 1.13B | 1.07B | 1.00B | 567.13M | 299.49M |
| Gross Profit | 837.51M | 617.94M | 293.11M | 360.87M | 105.43M | -41.14M |
| EBITDA | 246.43M | 258.69M | 263.33M | 286.33M | 80.58M | -84.60M |
| Net Income | 65.43M | 48.05M | 86.34M | 109.33M | -195.41M | -396.03M |
Balance Sheet | ||||||
| Total Assets | 3.06B | 3.17B | 3.24B | 3.21B | 2.97B | 3.15B |
| Cash, Cash Equivalents and Short-Term Investments | 52.40M | 81.38M | 121.59M | 67.56M | 38.62M | 111.80M |
| Total Debt | 1.11B | 1.18B | 1.29B | 1.30B | 1.18B | 1.15B |
| Total Liabilities | 1.48B | 1.57B | 1.59B | 1.61B | 1.44B | 1.43B |
| Stockholders Equity | 1.58B | 1.59B | 1.64B | 1.59B | 1.52B | 1.71B |
Cash Flow | ||||||
| Free Cash Flow | 121.02M | 142.82M | 118.55M | -43.36M | -49.44M | -173.32M |
| Operating Cash Flow | 238.63M | 224.41M | 237.56M | 206.24M | -2.31M | -83.69M |
| Investing Cash Flow | -28.59M | -112.12M | -120.85M | -248.60M | -62.20M | -78.97M |
| Financing Cash Flow | -276.91M | -150.67M | -56.73M | 74.03M | 5.17M | 117.71M |
Diamondrock Technical Analysis
Negative
8.04
Price Trends
8.12
Negative
7.89
Positive
8.01
Positive
Market Momentum
-0.01
Positive
41.59
Neutral
15.29
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 8.04 is below the 20-day moving average (MA) of 8.34, below the 50-day MA of 8.12, and above the 200-day MA of 8.01, indicating a neutral trend. The MACD of -0.01 indicates Positive momentum. The RSI at 41.59 is Neutral, neither overbought nor oversold. The STOCH value of 15.29 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 63 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 (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | 1.38B | 22.66 | 5.18% | 3.65% | 4.81% | 185.08% | |
63 Neutral | 1.13B | 35.67 | 2.98% | 8.14% | 1.42% | -20.13% | |
63 Neutral | $1.67B | 29.16 | 4.22% | 5.22% | 1.72% | -3.49% | |
62 Neutral | 1.83B | 452.58 | 1.02% | 3.81% | 0.37% | -97.38% | |
57 Neutral | 1.35B | -19.92 | -0.82% | 0.35% | 2.00% | 50.70% | |
52 Neutral | 2.31B | 43.64 | 1.68% | 12.40% | -3.19% | -81.33% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% |
* Real Estate Sector Average
Performance Comparison
DRH
Diamondrock
8.04
-0.30
-3.60%
SHO
Sunstone Hotel
9.46
-0.58
-5.78%
PEB
Pebblebrook Hotel
11.44
-1.75
-13.27%
RLJ
RLJ Lodging
7.37
-1.33
-15.29%
XHR
Xenia Hotels & Resorts
14.24
-0.08
-0.56%
PK
Park Hotels & Resorts
11.29
-1.57
-12.21%
Diamondrock Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
DiamondRock Prepays Mortgage Loan for Westin Boston
Positive
Sep 8, 2025
On September 5, 2025, DiamondRock Hospitality Company prepaid a $166.2 million mortgage loan for the Westin Boston Seaport District, resulting in all of the company’s debt becoming fully unsecured and prepayable at any time. This strategic financial move is part of DiamondRock’s broader efforts to optimize capital allocation, enhance shareholder value, and position itself for continued growth in the hospitality sector.
Private Placements and FinancingBusiness Operations and Strategy
DiamondRock Expands Credit Facility to $1.5 Billion
Positive
Jul 23, 2025
On July 22, 2025, DiamondRock Hospitality Company announced the successful refinancing and expansion of its senior unsecured credit facility from $1.2 billion to $1.5 billion, extending the maturity schedule and enhancing its financial flexibility. The new Credit Facility includes a $400 million revolving credit facility and three term loans totaling $1.1 billion, with maturity dates ranging from 2028 to 2030. This refinancing allows the company to repay three mortgage loans maturing in 2025, leaving it with no debt maturities until 2028 and a fully unencumbered portfolio, thereby strengthening its balance sheet and positioning it for future capital allocation opportunities.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.