Sunstone Hotel (SHO) AI Stock Analysis

• Market Cap: $1.83B
• Dividend Yield: 3.81%
• Average Volume (3M): 2.52M
• Price to Earnings (P/E): 452.6
• Beta (1Y): 0.97
• Revenue Growth: 0.37%
• EPS Growth: -97.38%
• Country: US
• Employees: 36
• Sector: Real Estate
• Sector Strength: 53
• Industry: REIT - Hotel & Motel
• EPS (TTM): 0.03
• Shares Outstanding: 189,969,350
• 10 Day Avg. Volume: 3,095,643
• 30 Day Avg. Volume: 2,524,086
• PEG Ratio: -0.65
• Price to Book (P/B): 1.14
• Price to Sales (P/S): 2.64
• P/FCF Ratio: 14.02
• Enterprise Value/Market Cap: 1.48
• Enterprise Value/Revenue: 2.91
• Enterprise Value/Gross Profit: 5.34
• Enterprise Value/Ebitda: 13.59
• 1Y Price Target: $9.38
• Price Target Upside: -2.70% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 63 Neutral
• Price Target: $10.50 ▲(8.92% Upside)

Sunstone Hotel's overall stock score reflects a stable financial foundation and moderate technical momentum. However, the high P/E ratio raises valuation concerns, and mixed earnings call guidance indicates potential challenges ahead. The dividend yield provides some support, but the stock's attractiveness is tempered by profitability and market demand uncertainties.

Positive Factors

Strong Urban Hotel Performance

The strong performance in urban hotels, with significant RevPAR growth, highlights Sunstone Hotel's ability to capitalize on business travel demand, enhancing its market position and revenue potential in key urban areas.

Capital Recycling and Share Repurchase

Strategic capital recycling and share repurchase efforts demonstrate Sunstone Hotel's focus on optimizing its asset portfolio and returning value to shareholders, strengthening its financial position and market confidence.

Cash Flow Management

Efficient cash flow management ensures Sunstone Hotel's ability to fund operations, invest in growth opportunities, and maintain financial stability, providing a solid foundation for long-term success.

Negative Factors

Weakness in Washington, D.C. Market

The weakness in the Washington, D.C. market due to government-related cancellations poses a risk to Sunstone Hotel's revenue stability, potentially affecting its overall financial performance in the near term.

Slower Ramp-Up at Andaz Miami Beach

The slower ramp-up at Andaz Miami Beach due to a delayed opening may hinder revenue growth and operational efficiency, affecting Sunstone Hotel's ability to capitalize on peak travel seasons.

Softness in Wailea Market

The softness in the Wailea market, with lower transient volumes, could negatively impact Sunstone Hotel's revenue and profitability, challenging its ability to meet financial targets in the short term.

Sunstone Hotel Business Overview & Revenue Model

Company Description

Sunstone Hotel (SHO) is a publicly traded real estate investment trust (REIT) focused on the acquisition, ownership, and asset management of premium-branded hotels in key markets across the United States. The company primarily invests in upscale and luxury hotel properties, partnering with leading hotel brands to provide exceptional guest experiences. Sunstone Hotel aims to maximize the value of its portfolio through strategic property management and targeted capital investments.

How the Company Makes Money

Sunstone Hotel generates revenue primarily through the operation of its hotel properties, which includes room bookings, food and beverage sales, and ancillary services such as event hosting and parking. The company's revenue model is bolstered by long-term management agreements with reputable hotel brands, ensuring a steady stream of income from franchise fees and royalties. Additionally, SHO may engage in property sales and acquisitions to capitalize on market opportunities, further diversifying its revenue streams. Significant partnerships with established hospitality brands enhance its market presence and operational efficiency, contributing to overall profitability.

Sunstone Hotel Financial Statement Overview

Summary

Sunstone Hotel demonstrates a stable financial position with strong gross margins and efficient cash flow management. However, challenges in improving net profitability and return on equity persist. The moderate leverage and strong equity base provide a solid foundation for future growth.

Income Statement

Sunstone Hotel's income statement shows a modest revenue growth of 1.33% TTM, with a gross profit margin of 54.42% and a net profit margin of 2.15%. While the gross profit margin is strong, the net profit margin indicates limited profitability. The EBIT and EBITDA margins are 7.40% and 21.39% respectively, suggesting operational efficiency but room for improvement in profitability.

Balance Sheet

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.44, indicating moderate leverage. The return on equity is low at 0.97%, suggesting limited returns for shareholders. The equity ratio stands at 65.75%, showing a strong equity base relative to total assets.

Cash Flow

Cash flow analysis reveals a healthy free cash flow growth of 2.40% TTM and a strong operating cash flow to net income ratio of 1.71. The free cash flow to net income ratio is 1.0, indicating efficient cash generation relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	935.00M	905.81M	985.98M	912.05M	509.15M	267.91M
Gross Profit	508.82M	421.74M	476.46M	463.50M	218.18M	16.22M
EBITDA	199.99M	203.64M	387.31M	249.23M	43.24M	-107.06M
Net Income	20.11M	43.26M	206.71M	87.29M	34.30M	-410.51M
Balance Sheet
Total Assets	3.01B	3.11B	3.15B	3.08B	3.04B	2.99B
Cash, Cash Equivalents and Short-Term Investments	73.56M	107.20M	426.40M	101.22M	120.48M	368.41M
Total Debt	878.52M	853.07M	831.29M	827.04M	634.55M	790.31M
Total Liabilities	1.03B	1.00B	982.68M	997.86M	801.27M	896.34M
Stockholders Equity	1.98B	2.10B	2.17B	2.08B	2.20B	2.05B
Cash Flow
Free Cash Flow	167.86M	170.38M	198.13M	80.81M	-35.29M	-116.81M
Operating Cash Flow	167.86M	170.38M	198.13M	209.38M	28.37M	-116.70M
Investing Cash Flow	-94.03M	-386.28M	258.08M	-165.72M	-239.69M	113.79M
Financing Cash Flow	-162.92M	-97.52M	-119.72M	-49.17M	-42.10M	-445.92M

Sunstone Hotel Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 9.64
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 9.64 is above the 20-day moving average (MA) of 9.58, above the 50-day MA of 9.24, and above the 200-day MA of 9.63, indicating a bullish trend. The MACD of 0.11 indicates Positive momentum. The RSI at 54.38 is Neutral, neither overbought nor oversold. The STOCH value of 24.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SHO.

Sunstone Hotel Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
XHR	71 Outperform	1.38B	22.43	5.18%	3.62%	4.81%	185.08%
RLJ	63 Neutral	1.13B	35.20	2.98%	8.06%	1.42%	-20.13%
SHO	63 Neutral	$1.83B	452.58	0.96%	3.81%	0.37%	-97.38%
DRH	63 Neutral	1.67B	28.94	4.15%	5.19%	1.72%	-3.49%
PEB	57 Neutral	1.36B	-19.97	-0.82%	0.35%	2.00%	50.70%
PK	52 Neutral	2.30B	42.62	1.68%	12.15%	-3.19%	-81.33%
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%

Sunstone Hotel Corporate Events

Sunstone Hotel Opens Renovated Andaz Miami Beach

On May 1, 2025, Sunstone Hotel Investors held its Annual Meeting of Stockholders, where key decisions included the election of directors and the approval of executive compensation and audit appointments. The company reported a decrease in net income for the first quarter of 2025 compared to the previous year, but saw increases in RevPAR and Adjusted EBITDAre. Sunstone opened the newly renovated Andaz Miami Beach, marking a significant milestone in its portfolio enhancement strategy. The company also continued its stock repurchase program and extended a term loan maturity, reflecting its focus on financial flexibility and shareholder returns.