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Diamondrock (DRH)
NYSE:DRH
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Diamondrock
(NYSE:DRH)
71Outperform
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. S&P 500 (SPY)
Market Cap
$1.60B
Dividend Yield2.17%
Average Volume (3M)3.22M
Price to Earnings (P/E)39.6
Beta (1Y)1.02
Revenue Growth3.73%
EPS Growth-44.49%
CountryUS
Employees31
SectorReal Estate
Sector Strength68
IndustryREIT - Hotel & Motel
Share Statistics
EPS (TTM)0.04
Shares Outstanding206,311,250
10 Day Avg. Volume2,949,322
30 Day Avg. Volume3,222,217
Financial Highlights & Ratios
PEG Ratio5.80
Price to Book (P/B)1.01
Price to Sales (P/S)0.00
P/FCF Ratio15.53
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$8.43Price Target Upside9.06% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
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 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 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.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 | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.13B | 1.13B | 1.07B | 1.00B | 567.13M | 299.49M | Gross Profit |
| 633.24M | 617.94M | 293.11M | 360.87M | 134.34M | -41.14M | EBIT |
| 48.64M | 143.15M | 261.06M | 164.11M | -29.10M | -196.57M | EBITDA |
| 231.02M | 215.79M | 263.33M | 272.96M | 73.86M | -202.51M | Net Income Common Stockholders |
| 49.12M | 48.05M | 86.34M | 109.33M | -195.41M | -396.03M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 100.62M | 81.38M | 121.59M | 67.56M | 38.62M | 111.80M | Total Assets |
| 3.10B | 3.17B | 3.24B | 3.21B | 2.97B | 3.15B | Total Debt |
| 0.00 | 1.18B | 1.29B | 1.30B | 1.18B | 1.15B | Net Debt |
| -100.62M | 1.10B | 1.17B | 1.23B | 1.14B | 1.04B | Total Liabilities |
| 1.53B | 1.57B | 1.59B | 1.61B | 1.44B | 1.43B | Stockholders Equity |
| 1.56B | 1.59B | 1.64B | 1.59B | 1.52B | 1.71B |
| Cash Flow | Free Cash Flow | ||||
| 102.03M | 142.82M | 118.55M | -43.36M | -49.44M | -173.32M | Operating Cash Flow |
| 220.85M | 224.41M | 237.56M | 206.24M | -2.31M | -83.69M | Investing Cash Flow |
| -29.80M | -112.12M | -120.85M | -248.60M | -62.20M | -78.97M | Financing Cash Flow |
| -205.97M | -150.67M | -56.73M | 74.03M | 5.17M | 117.71M |
Diamondrock Technical Analysis
Positive
7.73
Price Trends
7.48
Positive
8.04
Negative
8.28
Negative
Market Momentum
0.13
Negative
55.94
Neutral
55.63
Neutral
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 7.73 is above the 20-day moving average (MA) of 7.49, above the 50-day MA of 7.48, and below the 200-day MA of 8.28, indicating a neutral trend. The MACD of 0.13 indicates Negative momentum. The RSI at 55.94 is Neutral, neither overbought nor oversold. The STOCH value of 55.63 is Neutral, 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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $2.16B | 18.34 | 3.46% | 9.19% | -3.68% | 35.35% | |
71 Outperform | $1.60B | 39.64 | 3.22% | 2.17% | 3.73% | -44.49% | |
69 Neutral | $1.20B | 54.91 | 1.83% | 4.07% | 3.57% | 12.66% | |
68 Neutral | $1.18B | ― | -0.33% | 0.39% | 2.18% | 56.00% | |
64 Neutral | $1.14B | 29.07 | 2.92% | 7.25% | 2.82% | -8.08% | |
61 Neutral | $1.77B | 92.24 | 1.66% | 4.04% | -3.90% | -89.21% | |
60 Neutral | $2.82B | 10.29 | 0.31% | 8508.26% | 5.91% | -17.42% |
* Real Estate Sector Average
Performance Comparison
DRH
Diamondrock
7.73
-0.36
-4.45%
SHO
Sunstone Hotel
8.83
-1.18
-11.79%
PEB
Pebblebrook Hotel
9.95
-4.92
-33.09%
RLJ
RLJ Lodging
7.50
-2.10
-21.87%
XHR
Xenia Hotels & Resorts
12.14
-1.77
-12.72%
PK
Park Hotels & Resorts
10.80
-3.85
-26.28%
Diamondrock Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q1-2025)
| % Change Since: 4.46%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with both positive trends in urban RevPAR growth, effective cost management, and a strong group revenue increase. However, these were balanced by challenges in the resort portfolio, a decline in food and beverage revenue, and downward revisions in adjusted EBITDA and FFO guidance. The sentiment reflects cautious optimism amidst an unsettled economic environment.Q1-2025 Updates
Positive Updates
Urban Portfolio RevPAR Growth
Comparable RevPAR increased 2% over 2024, and total RevPAR increased 1.6%. The urban footprint was the primary driver, with a 5% increase, particularly driven by group and business transient segments.
Cost Management Success
Resort expenses were reduced by 24% compared to 2024, expanding hotel adjusted EBITDA margin by 76 basis points to 32.5%.
Strong Group Room Revenue
First-quarter group room revenues increased 10.4% over last year on a 5.2% increase in room nights. Urban Hotels saw a 14.4% increase in group revenues.
Improved Free Cash Flow
Free cash flow per share in the trailing four quarters increased 10% to 63¢ per share over the prior four-quarter period.
Share Repurchase Program
Repurchased 1.4 million shares of common stock at an average price of $7.85, with a $160 million capacity remaining for further repurchases.
Negative Updates
Resort Portfolio Decline
Comparable RevPAR declined 2.1% over 2024 in the resort portfolio, with a total RevPAR down slightly by 40 basis points.
Food and Beverage Revenue Decline
Food and beverage revenue at urban hotels declined 3.3% year over year, primarily due to changes in group program dynamics at the Chicago Marriott.
Group Booking Conversion Challenges
Although group lead generation remains strong, closure rates have been softer recently due to an unsettled macroeconomic environment.
Adjusted EBITDA and FFO Guidance Reduction
2025 corporate adjusted EBITDA is expected to be $5 million lower than previous guidance, and adjusted FFO is expected to be $1 million lower.
Company Guidance
During DiamondRock Hospitality Company's First Quarter 2025 Earnings Conference Call, the company provided several key metrics and guidance for the year. The company reported that comparable Revenue Per Available Room (RevPAR) increased by 2% over 2024, while total RevPAR rose by 1.6%. Urban hotels drove the RevPAR growth, with a 5% increase and a notable contribution from group and business transient segments. Despite a 3.3% decline in food and beverage revenue at urban hotels primarily due to the Chicago Marriott, excluding this property, food and beverage revenues increased by 5.5%. Total expenses in the urban portfolio rose by 2.1%, mainly due to a 1.5% increase in wages and benefits, while hotel adjusted EBITDA margins improved by 54 basis points. In contrast, the resort portfolio saw a 2.1% decline in comparable RevPAR, partly attributed to a calendar shift affecting March performance. Despite this, the Heights and Bale properties experienced a successful ski season, with RevPAR and total RevPAR increasing by 7% and 9.5%, respectively. First-quarter group room revenues across the portfolio increased by 10.4% on a 5.2% rise in room nights. For 2025, the company revised its full-year RevPAR growth outlook to a range of minus 1% to plus 1%, a reduction of about 200 basis points from previous guidance. Corporate adjusted EBITDA is expected to range from $270 to $295 million, with adjusted FFO per share remaining unchanged at $0.94 to $1.06. The company also repurchased 1.4 million shares in the first quarter and continued repurchases after quarter-end, reflecting a focus on driving shareholder value through prudent capital allocation.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.
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.