Sunstone Hotel (SHO) AI Stock Analysis

• Market Cap: $1.80B
• Dividend Yield: 4.02%
• Average Volume (3M): 2.31M
• Price to Earnings (P/E): 93.4
• Beta (1Y): 0.98
• Revenue Growth: -3.90%
• EPS Growth: -89.21%
• Country: US
• Employees: 36
• Sector: Real Estate
• Sector Strength: 59
• Industry: REIT - Hotel & Motel
• EPS (TTM): 0.01
• Shares Outstanding: 198,858,960
• 10 Day Avg. Volume: 1,695,776
• 30 Day Avg. Volume: 2,305,965
• PEG Ratio: -1.41
• Price to Book (P/B): 0.86
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 10.86
• Enterprise Value/Market Cap: 1.42
• Enterprise Value/Revenue: 0.70
• Enterprise Value/Gross Profit: 5.05
• Enterprise Value/Ebitda: 2.99
• 1Y Price Target: $9.58
• Price Target Upside: 6.09% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 64 Neutral
• Price Target: $9.50 ▲(5.20%Upside)

Sunstone Hotel's moderate overall score is driven by stable financial health and operational efficiency, despite challenges in profitability and cash flow. The technical and valuation indicators suggest cautious optimism, while the earnings call provides a positive, albeit tempered, outlook due to macroeconomic uncertainties.

Positive Factors

Acquisition Interest

Sunstone Hotel Investors received interest in being acquired by Trinity Investments at a significant premium to its recent trading price.

Financial Stability

The company has the second lowest leverage in its group, which is favorable for its financial stability.

Revenue Performance

Sunstone Hotel Investors reported stronger total revenues and RevPAR in the fourth quarter, coming in above market estimates and consensus.

Negative Factors

Guidance Concerns

Sunstone Hotel Investors' 2025 EBITDA guidance came in below consensus, potentially putting pressure on the stock.

Labor Impact

The company's fourth-quarter EBITDA margins were lower, impacted by labor activity, which led to weaker margins despite strong revenue performance.

Union Negotiation Disruption

There is pressure from union negotiation disruption in San Diego, which could impact operations.

Sunstone Hotel Business Overview & Revenue Model

Company Description

Sunstone 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 Money

Sunstone Hotel (SHO) generates revenue primarily through the ownership and operation of hotel properties. The company's key revenue streams include room bookings, food and beverage services, and event hosting at their hotels. Additionally, SHO benefits from strategic partnerships with major hotel brands, which enhance guest loyalty and occupancy rates. The company also seeks to increase profitability by optimizing operational efficiencies and capitalizing on market trends in the hospitality industry.

Sunstone Hotel Financial Statement Overview

Summary

Sunstone Hotel exhibits stable financial health with strong operational efficiency and a conservative approach to leverage. The company maintains a solid equity position but faces challenges in enhancing profitability and cash flow growth. Its income statement, balance sheet, and cash flow positions are all moderately strong, but improvement in profitability and cash conversion is needed.

Income Statement

The income statement shows moderate performance. The TTM gross profit margin is 54.77% and the net profit margin is 3.85%, both indicating stable profitability. Revenue growth is slightly positive at 1.86% from the previous year, suggesting slow growth. EBIT and EBITDA margins of 11.80% and 22.70% respectively, indicate healthy operational efficiency, though there is room for improvement in net profitability.

Balance Sheet

The balance sheet reveals a strong equity position with an equity ratio of 67.11%, indicating financial stability. The debt-to-equity ratio is 0.41, reflecting a conservative leverage approach. However, the return on equity (ROE) is low at 1.71%, suggesting that the company is not fully leveraging its equity to generate higher profits.

Cash Flow

The cash flow statement indicates a robust free cash flow to net income ratio of 4.62, suggesting strong cash generation relative to earnings. However, the operating cash flow to net income ratio of 4.62 highlights potential issues in converting earnings into cash. The free cash flow growth rate is negative, showing a 3.79% decline from the previous year, which could be a concern for future liquidity.

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

Sunstone Hotel Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 9.03
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• 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 9.03 is above the 20-day moving average (MA) of 8.91, above the 50-day MA of 8.81, and below the 200-day MA of 9.85, indicating a neutral trend. The MACD of 0.06 indicates Positive momentum. The RSI at 55.68 is Neutral, neither overbought nor oversold. The STOCH value of 45.79 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
PK	71 Outperform	$2.24B	18.89	3.46%	12.58%	-3.68%	35.35%
XHR	70 Outperform	$1.32B	59.55	1.83%	3.90%	3.57%	12.66%
Sector *	70 Outperform	¥235.22B	14.58	10.69%	3.77%	18.27%	21.04%
DRH	70 Neutral	$1.70B	41.56	3.22%	5.12%	3.73%	-44.49%
PEB	69 Neutral	$1.28B	―	-0.33%	0.37%	2.18%	56.00%
SHO	64 Neutral	$1.80B	93.38	1.66%	4.02%	-3.90%	-89.21%
RLJ	64 Neutral	$1.20B	30.14	2.92%	7.62%	2.82%	-8.08%

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.