Education
About Us
Working with TipRanks
Follow Us
Sunstone Hotel Investors (SHO)
NYSE:SHO
Top Page
Sunstone Hotel
(NYSE:SHO)
Select Model
Select Model
Rating:62Neutral
Price Target:
$10.00
â–²(7.76% Upside)
Action:ReiteratedDate:02/28/26
The score is supported primarily by improved financial resilience from a much stronger balance sheet and generally stable operating cash flow, plus a neutral-to-slightly positive technical setup. These positives are tempered by thin and volatile profitability with weaker 2025 free cash flow, an extremely high P/E ratio, and a mixed earnings-call backdrop citing both market strength in select regions and a challenging operating environment.
Positive Factors
Balance sheet strength
Sunstone's 2025 balance-sheet repair — very low debt-to-equity, sizeable equity (~$1.94B) versus ~$3.03B assets — materially improves resilience in the cyclical lodging sector. Lower leverage increases financial flexibility for capital spending, acquisitions or stress periods.
Cash generation & liquidity
Consistent operating cash flow near $170–182M supports recurring distributions and strategic capital allocation. Combined with reported total liquidity (~$700M) and cash on hand, this cash generation underpins the firm's ability to fund renovations, dividends and share buybacks over multiple quarters.
Portfolio performance in key urban markets
Outperformance in high-value urban markets (San Francisco >15% RevPAR, urban hotels +140bps margin) demonstrates concentration in premium, brand-operated assets where group and corporate demand drives higher RevPAR and NOI, supporting more durable cash flows versus commodity lodging.
Negative Factors
Free cash flow volatility
A sharp drop to ~$32M FCF in 2025 after stronger prior years signals capital spending or working-capital pressure that reduces the consistency of owner-level cash available for dividends, buybacks, or deleveraging, undermining predictability of shareholder returns.
Thin and volatile net profitability
Low 2025 net margin (~2.6%) and volatile year-to-year results compress returns on equity (~1.3%) and limit earnings resilience. Even with decent EBITDA margins, sensitivity to RevPAR swings means owner earnings can fluctuate materially across economic cycles and market disruptions.
Concentration & demand-risk (resorts, government)
Exposure to resort markets and government-driven demand creates concentration risk: natural disasters, regional softness (South Florida, Maui) and weaker D.C. government demand can produce material, localized NOI losses and add recurring volatility to portfolio cash flows and forecasting.
Sunstone Hotel (SHO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.76B
Dividend Yield3.98%
Average Volume (3M)1.25M
Price to Earnings (P/E)219.4
Beta (1Y)0.94
Revenue Growth3.04%
EPS Growth-98.77%
CountryUS
Employees36
SectorReal Estate
Sector Strength53
IndustryREIT - Hotel & Motel
Share Statistics
EPS (TTM)0.02
Shares Outstanding189,903,150
10 Day Avg. Volume1,268,210
30 Day Avg. Volume1,253,936
Financial Highlights & Ratios
PEG Ratio-1.01
Price to Book (P/B)0.89
Price to Sales (P/S)1.80
P/FCF Ratio9.52
Enterprise Value/Market Cap0.94
Enterprise Value/Revenue1.73
Enterprise Value/Gross Profit36.43
Enterprise Value/Ebitda8.48
Forecast
1Y Price Target
$10.00Price Target Upside7.76% Upside
Rating ConsensusHold
Number of Analyst Covering5
EPS Forecast (FY)0.11
Revenue Forecast (FY)$971.42M
Sunstone Hotel Business Overview & Revenue Model
Company DescriptionSunstone Hotel Investors, Inc. is a lodging real estate investment trust (REIT) that as of the date of this release has interests in 19 hotels comprised of 9,997 rooms. Sunstone's business is to acquire, own, asset manage and renovate or reposition hotels considered to be Long-Term Relevant Real Estate®, the majority of which are operated under nationally recognized brands, such as Marriott, Hilton and Hyatt.
How the Company Makes MoneySunstone Hotel generates revenue primarily through the leasing and management of its hotel properties. The company earns income from room bookings, food and beverage sales, and ancillary services like event hosting and catering. Key revenue streams include direct sales from guest accommodations, which constitute the largest portion of revenue, as well as revenue from partnerships with travel agencies and online booking platforms. Additionally, Sunstone may benefit from management fees by operating hotels on behalf of third-party owners. The company also focuses on maximizing asset value through strategic renovations and operational efficiencies, contributing to increased revenue over time.
Sunstone Hotel Earnings Call Summary
Earnings Call Date:Nov 07, 2025
(Q3-2025)
| Next Earnings Date:May 06, 2026
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment with notable achievements in specific markets like San Francisco and strong financial management, but it also highlights challenges such as disruptions from natural events and a challenging operating environment. The company remains optimistic about future growth.Q3-2025 Updates
Positive Updates
San Francisco RevPAR Growth
San Francisco recorded more than 15% RevPAR growth, standing out as a top performer in the company's portfolio.
Margin Growth at Urban Hotels
Despite flat RevPAR, urban hotels achieved 140 basis points of margin growth by controlling costs effectively.
Strong Balance Sheet
The company maintained a strong balance sheet with net leverage of only 3.5x trailing earnings, nearly $200 million in cash and equivalents, and $700 million of total liquidity.
Positive Group Booking Trends
The company booked 6% more rooms than the prior year, marking the strongest third quarter booking volume since before the pandemic. Positive group pace is noted heading into 2026, particularly in Orlando, Boston, Miami, San Francisco, and Wine Country.
Andaz Miami Beach Recovery
Andaz Miami Beach's guest response and lead volume improved, with the resort ranking #8 on TripAdvisor for Miami Beach Hotels. The property is pacing well to achieve desired occupancy goals and deliver strong growth next year.
Negative Updates
Disruption at Four Seasons Napa Valley
The Pickett Fire in Napa County caused cancellations and lower business volumes, leading to a 50 basis point drag on RevPAR growth and a $1 million headwind to earnings.
Challenging Operating Environment
The company faces a choppy operating environment with additional uncertainty from a government shutdown, impacting the travel and hotel demand.
Softer Resort Portfolio Performance
Weaker demand in South Florida and the Keys, along with challenges in Maui, resulted in softer-than-expected performance across the resort portfolio.
Government Demand Weakness
Washington, D.C. performance was hampered by weaker government and government-related demand, affecting overall market results.
Company Guidance
During the Sunstone Hotel Investors Third Quarter Earnings Call, the company provided guidance highlighting several key metrics and trends. The third quarter saw a 2% increase in RevPAR and a 2.4% growth in total RevPAR compared to the previous year. Adjusted EBITDAre was reported at $50 million, while adjusted FFO was $0.17 per diluted share. The company experienced a 140 basis point margin growth in its urban hotels, with Marriott Boston Long Wharf achieving a 47% EBITDA margin, a 100 basis point increase from the prior year. Convention hotels reported a 3.5% RevPAR growth, with San Francisco leading the market with over 15% RevPAR growth. Despite disruptions from the Pickett Fire, the company maintained its full-year earnings outlook, projecting mid-single-digit total portfolio RevPAR growth in the fourth quarter. Sunstone also reported maintaining a strong balance sheet with a net leverage of 3.5x trailing earnings and total liquidity of $700 million. The company repurchased 11.4 million shares year-to-date at an average price of $8.83, totaling $101 million, and declared a $0.09 per share common dividend for the fourth quarter.Sunstone Hotel Financial Statement Overview
Summary
Balance sheet strength is a clear positive (very low leverage in 2025), improving resilience for a cyclical hotel REIT. However, profitability is currently modest (thin 2025 net margin) and results have been volatile versus 2023. Operating cash flow is solid, but free cash flow fell sharply in 2025, reducing consistency.Income Statement
Revenue has recovered meaningfully since 2020, but the growth profile is uneven: 2025 revenue grew (+2.4%) after a decline in 2024 (-8.2%). Profitability is currently modest with a low 2025 net margin (~2.6%), and results have been volatile across years (strong profitability in 2023 vs. much weaker in 2024–2025). EBITDA margin remains healthy in 2024–2025 (~22%–24%), but the sharp step-down from 2023 levels highlights cyclicality and sensitivity to operating conditions.62
Positive
Balance Sheet
Leverage improved dramatically in 2025 with total debt dropping to a very low level (debt-to-equity ~0.00), strengthening financial flexibility versus 2021–2024 when leverage was moderate (debt-to-equity roughly ~0.29–0.41). Equity remains sizeable (~$1.94B in 2025) relative to total assets (~$3.03B), supporting balance sheet stability. The tradeoff is that returns on equity are currently low (~1.3% in 2025), reflecting subdued profitability despite the stronger capital structure.78
Positive
Cash Flow
Operating cash flow is solid in 2024–2025 (~$170M–$182M), indicating the core business is generating cash. However, free cash flow weakened sharply in 2025 (~$32M) after being much stronger in 2023–2024, with a steep negative free-cash-flow growth rate in 2025, suggesting higher capital spending and/or working-capital pressure. Cash generation is positive overall, but free cash flow volatility reduces quality and consistency.55
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 960.13M | 905.81M | 986.48M | 912.05M | 509.15M |
| Gross Profit | 45.58M | 421.74M | 476.96M | 447.66M | 206.83M |
| EBITDA | 212.26M | 214.29M | 387.31M | 249.23M | 193.51M |
| Net Income | 24.57M | 43.26M | 206.71M | 87.29M | 34.30M |
Balance Sheet | |||||
| Total Assets | 3.03B | 3.11B | 3.15B | 3.08B | 3.04B |
| Cash, Cash Equivalents and Short-Term Investments | 109.19M | 107.20M | 426.40M | 101.22M | 120.48M |
| Total Debt | 7.35M | 853.07M | 831.29M | 831.69M | 634.55M |
| Total Liabilities | 1.08B | 1.00B | 982.68M | 997.86M | 801.27M |
| Stockholders Equity | 1.94B | 2.10B | 2.17B | 2.08B | 2.20B |
Cash Flow | |||||
| Free Cash Flow | 181.76M | 170.38M | 198.13M | 80.81M | -35.29M |
| Operating Cash Flow | 181.76M | 170.38M | 198.13M | 209.38M | 28.37M |
| Investing Cash Flow | -48.80M | -386.28M | 258.08M | -165.72M | -239.69M |
| Financing Cash Flow | -127.52M | -97.52M | -119.72M | -49.17M | -42.10M |
Sunstone Hotel Technical Analysis
Positive
9.28
Price Trends
9.16
Positive
9.17
Positive
9.06
Positive
Market Momentum
0.08
Negative
51.45
Neutral
66.65
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHO, the sentiment is Positive. The current price of 9.28 is above the 20-day moving average (MA) of 9.19, above the 50-day MA of 9.16, and above the 200-day MA of 9.06, indicating a bullish trend. The MACD of 0.08 indicates Negative momentum. The RSI at 51.45 is Neutral, neither overbought nor oversold. The STOCH value of 66.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SHO.
Sunstone Hotel Risk Analysis
Sunstone Hotel disclosed 63 risk factors in its most recent earnings report. Sunstone Hotel 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
Sunstone Hotel Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
64 Neutral | $2.06B | 22.82 | 6.68% | 5.13% | 0.95% | -8.40% | |
63 Neutral | $2.28B | -7.93 | -8.38% | 13.10% | -3.57% | -104.55% | |
62 Neutral | $1.76B | 219.39 | 0.88% | 3.98% | 3.04% | -98.77% | |
62 Neutral | $1.46B | -14.20 | -3.74% | 0.34% | 0.99% | -360.58% | |
62 Neutral | $1.22B | 541.89 | 1.28% | 7.76% | -0.58% | -83.32% | |
62 Neutral | $1.41B | 23.72 | 4.58% | 3.71% | 4.29% | 141.01% |
* Real Estate Sector Average
SHO
Sunstone Hotel
9.28
-0.88
-8.65%
DRH
Diamondrock
10.04
2.06
25.80%
PEB
Pebblebrook Hotel
12.83
0.60
4.86%
RLJ
RLJ Lodging
8.02
-0.84
-9.48%
XHR
Xenia Hotels & Resorts
15.28
2.32
17.93%
PK
Park Hotels & Resorts
11.31
0.10
0.92%
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.