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Sunstone Hotel Investors (SHO)
NYSE:SHO
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Sunstone Hotel
(NYSE:SHO)
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Rating:57Neutral
Price Target:
$9.00
â–¼(-3.12% Downside)
Sunstone Hotel's overall stock score is primarily influenced by its financial performance and technical analysis. The company shows strong revenue growth and a stable balance sheet, but faces challenges in profitability and cash flow. Technical indicators suggest bearish momentum, contributing to a lower score. Valuation concerns due to a high P/E ratio further impact the score negatively. However, positive corporate events and a mixed but optimistic earnings call provide some support.
Positive Factors
Strong Balance Sheet
A strong balance sheet with low leverage provides financial stability and flexibility, allowing Sunstone Hotel to invest in growth opportunities and weather economic downturns.
Revenue Growth
Robust revenue growth signals effective market positioning and the successful execution of business strategies, enhancing long-term shareholder value.
Financial Flexibility
The new credit agreement strengthens the balance sheet and lowers borrowing costs, providing Sunstone Hotel with the ability to manage debt and invest in strategic initiatives.
Negative Factors
Margin Pressure
Declining margins indicate challenges in maintaining cost efficiency, which could impact profitability and limit the company's ability to reinvest in growth.
Cash Flow Challenges
Negative cash flow growth suggests difficulties in generating sufficient cash, potentially affecting the company's ability to fund operations and capital expenditures.
Challenging Operating Environment
A challenging operating environment can hinder demand and revenue growth, impacting Sunstone Hotel's ability to achieve its financial targets and strategic goals.
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)1023.9
Beta (1Y)0.93
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-0.65
Price to Book (P/B)1.14
Price to Sales (P/S)2.64
P/FCF Ratio14.02
Enterprise Value/Market Cap1.58
Enterprise Value/Revenue2.97
Enterprise Value/Gross Profit6.39
Enterprise Value/Ebitda14.02
Forecast
1Y Price Target
$10.33Price Target Upside11.19% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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)
| % Change Since: |
Next Earnings Date:Feb 24, 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
Sunstone Hotel demonstrates a stable financial position with strong gross margins and efficient cash flow management. However, the company faces challenges in improving net profitability and return on equity. 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 | 937.93M | 905.81M | 986.48M | 912.05M | 509.15M | 267.91M |
| Gross Profit | 435.49M | 421.74M | 476.96M | 447.66M | 206.83M | 16.22M |
| EBITDA | 198.56M | 214.29M | 387.31M | 249.23M | 193.51M | -216.68M |
| Net Income | 18.19M | 43.26M | 206.71M | 87.29M | 34.30M | -404.69M |
Balance Sheet | ||||||
| Total Assets | 3.05B | 3.11B | 3.15B | 3.08B | 3.04B | 2.99B |
| Cash, Cash Equivalents and Short-Term Investments | 121.14M | 107.20M | 426.40M | 101.22M | 120.48M | 368.41M |
| Total Debt | 926.03M | 853.07M | 831.29M | 831.69M | 634.55M | 790.31M |
| Total Liabilities | 1.09B | 1.00B | 982.68M | 997.86M | 801.27M | 896.34M |
| Stockholders Equity | 1.96B | 2.10B | 2.17B | 2.08B | 2.20B | 2.05B |
Cash Flow | ||||||
| Free Cash Flow | 157.97M | 170.38M | 198.13M | 80.81M | -35.29M | -116.70M |
| Operating Cash Flow | 175.63M | 170.38M | 198.13M | 209.38M | 28.37M | -116.70M |
| Investing Cash Flow | -70.76M | -386.28M | 258.08M | -165.72M | -239.69M | 113.79M |
| Financing Cash Flow | -99.86M | -97.52M | -119.72M | -49.17M | -42.10M | -445.92M |
Sunstone Hotel Technical Analysis
Positive
9.29
Price Trends
9.18
Positive
9.25
Positive
8.94
Positive
Market Momentum
0.02
Negative
54.17
Neutral
74.53
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 9.29 is above the 20-day moving average (MA) of 9.17, above the 50-day MA of 9.18, and above the 200-day MA of 8.94, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 54.17 is Neutral, neither overbought nor oversold. The STOCH value of 74.53 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% | |
65 Neutral | $1.88B | 35.44 | 3.98% | 5.13% | 0.95% | -8.40% | |
64 Neutral | $1.42B | 26.71 | 4.58% | 3.71% | 4.29% | 141.01% | |
58 Neutral | $1.17B | 160.87 | 1.49% | 7.76% | -0.58% | -83.32% | |
57 Neutral | $1.76B | 1,023.91 | 0.88% | 3.98% | 3.04% | -98.77% | |
56 Neutral | $2.23B | -148.47 | -0.36% | 13.10% | -3.57% | -104.55% | |
54 Neutral | $1.36B | -10.07 | -3.74% | 0.34% | 0.99% | -360.58% |
* Real Estate Sector Average
SHO
Sunstone Hotel
9.29
-1.88
-16.83%
DRH
Diamondrock
9.16
0.71
8.40%
PEB
Pebblebrook Hotel
11.93
-1.28
-9.69%
RLJ
RLJ Lodging
7.68
-1.48
-16.16%
XHR
Xenia Hotels & Resorts
14.96
0.88
6.25%
PK
Park Hotels & Resorts
11.15
-1.63
-12.75%
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.