Diamondrock (DRH) AI Stock Analysis

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Diamondrock

(NYSE:DRH)

Rating:61Neutral

Price Target:

$8.50

▲(0.12% Upside)

Diamondrock's overall score is driven by solid financial performance and positive earnings call sentiment. However, high valuation and technical uncertainties weigh on the score. The company's strategic initiatives, such as refinancing and share repurchases, are positive, but challenges in revenue growth and occupancy remain.

Positive Factors

Dividends

DRH declared a $0.03/sh Q4 dividend, unchanged since '22, but also a $0.20 stub, totaling $0.32/sh in 2024.

Stock Performance

Shares of DRH have outperformed its lodging peers YTD (-1.7% vs. the group of -8.7%).

Negative Factors

Market Trends

2025 Group Pace Currently Trending Down.

Operational Performance

We do not expect operational outperformance by the company in 2025.

Diamondrock (DRH) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.76B

Dividend Yield4.98%

Average Volume (3M)2.80M

Price to Earnings (P/E)30.3

Beta (1Y)1.06

Revenue Growth1.72%

EPS Growth-3.49%

CountryUS

Employees31

SectorReal Estate

Sector Strength58

IndustryREIT - Hotel & Motel

Share Statistics

EPS (TTM)0.18

Shares Outstanding204,954,590

10 Day Avg. Volume2,097,206

30 Day Avg. Volume2,800,782

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 Cap1.48

Enterprise Value/Revenue2.32

Enterprise Value/Gross Profit3.11

Enterprise Value/Ebitda10.57

Forecast

1Y Price Target

$9.08

Price Target Upside6.95% 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:Oct 30, 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

Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

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

Technical Analysis Sentiment

Positive

Last Price8.49

Price Trends

50DMA

7.97

Positive

100DMA

7.68

Positive

200DMA

8.05

Positive

Market Momentum

MACD

0.18

Negative

RSI

61.25

Neutral

STOCH

84.13

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRH, the sentiment is Positive. The current price of 8.49 is above the 20-day moving average (MA) of 8.07, above the 50-day MA of 7.97, and above the 200-day MA of 8.05, indicating a bullish trend. The MACD of 0.18 indicates Negative momentum. The RSI at 61.25 is Neutral, neither overbought nor oversold. The STOCH value of 84.13 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
XHR	71 Outperform	$1.36B	22.30	5.00%	3.64%	4.81%	185.08%
SHO	66 Neutral	$1.80B	445.07	0.96%	3.79%	0.37%	-97.38%
Sector *	63 Neutral	$7.06B	13.77	-0.50%	7.05%	4.08%	-25.24%
PK	62 Neutral	$2.35B	44.39	1.58%	12.04%	-3.19%	-81.33%
DRH	61 Neutral	$1.76B	30.35	4.22%	4.98%	1.72%	-3.49%
RLJ	59 Neutral	$1.17B	36.77	2.53%	7.91%	1.42%	-20.13%
PEB	57 Neutral	$1.32B	―	-0.81%	0.35%	2.00%	50.70%

* Real Estate Sector Average

Performance Comparison

DRH

Diamondrock

8.43

0.44

5.51%

SHO

Sunstone Hotel

9.35

-0.35

-3.61%

PEB

Pebblebrook Hotel

11.54

-1.40

-10.82%

RLJ

RLJ Lodging

7.59

-1.05

-12.15%

XHR

Xenia Hotels & Resorts

14.28

0.92

6.89%

Park Hotels & Resorts

11.90

-1.04

-8.04%

Diamondrock Corporate Events

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.

The most recent analyst rating on (DRH) stock is a Hold with a $10.25 price target. To see the full list of analyst forecasts on Diamondrock stock, see the DRH Stock Forecast page.

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.Date of analysis: Aug 14, 2025