Sunstone Hotel (SHO) AI Stock Analysis

• Market Cap: $1.70B
• Dividend Yield: 3.88%
• Average Volume (3M): 1.27M
• Price to Earnings (P/E): 419.7
• Beta (1Y): 1.01
• Revenue Growth: 0.37%
• EPS Growth: -97.38%
• Country: US
• Employees: 36
• Sector: Real Estate
• Sector Strength: 53
• Industry: REIT - Hotel & Motel
• EPS (TTM): -0.02
• Shares Outstanding: 189,969,350
• 10 Day Avg. Volume: 1,018,934
• 30 Day Avg. Volume: 1,265,039
• 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: 1.60
• Enterprise Value/Revenue: 2.91
• Enterprise Value/Gross Profit: 5.34
• Enterprise Value/Ebitda: 13.59
• 1Y Price Target: $9.83
• Price Target Upside: 8.14% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 61 Neutral
• Price Target: $9.50 ▲(4.51% Upside)

Sunstone Hotel's overall stock score is driven by a stable financial position and efficient cash flow management. However, the high P/E ratio suggests overvaluation, and technical indicators show weak momentum. The earnings call highlighted both strengths in urban markets and challenges in other areas, leading to a cautious outlook.

Positive Factors

Strong Urban Hotel Performance

The robust performance in urban hotels, with significant RevPAR growth, indicates strong demand in key markets, enhancing revenue stability and supporting long-term growth prospects.

Effective Capital Recycling

Strategic asset sales and share repurchases demonstrate effective capital management, enhancing shareholder value and providing financial flexibility for future investments.

Cash Flow Efficiency

Efficient cash flow management supports operational stability and provides the capacity to fund strategic initiatives, ensuring long-term financial health.

Negative Factors

Weakness in Washington, D.C. Market

Challenges in the Washington, D.C. market due to reduced demand can affect revenue growth and highlight regional vulnerabilities in the company's portfolio.

Slower Ramp-Up at Andaz Miami Beach

The slower-than-expected ramp-up at Andaz Miami Beach may delay anticipated revenue contributions, impacting short-term financial performance and strategic growth plans.

Low Net Profit Margin

A low net profit margin suggests challenges in converting revenue into profit, potentially limiting the company's ability to reinvest in growth and improve shareholder returns.

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: 9.09
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• 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 9.09 is below the 20-day moving average (MA) of 9.11, below the 50-day MA of 9.29, and below the 200-day MA of 9.19, indicating a neutral trend. The MACD of -0.05 indicates Negative momentum. The RSI at 54.18 is Neutral, neither overbought nor oversold. The STOCH value of 64.11 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
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%
DRH	63 Neutral	$1.68B	29.45	4.22%	5.72%	1.72%	-3.49%
SHO	61 Neutral	$1.70B	419.72	0.96%	3.88%	0.37%	-97.38%
RLJ	58 Neutral	$1.03B	32.47	2.53%	8.75%	1.42%	-20.13%
XHR	58 Neutral	$1.22B	22.89	4.58%	4.21%	4.29%	141.01%
PEB	52 Neutral	$1.22B	-17.90	-3.74%	0.38%	0.99%	-360.58%
PK	52 Neutral	$1.99B	―	-0.36%	13.05%	-3.57%	-104.55%

Sunstone Hotel Corporate Events

Sunstone Hotel Secures $1.35 Billion Credit Agreement

On September 24, 2025, Sunstone Hotel Investors, Inc. entered into a Third Amended and Restated Credit Agreement with a total borrowing capacity of $1.35 billion. This agreement, which includes a $500 million revolving credit facility and three term loans totaling $850 million, aims to address near-term maturities, extend loan durations, and strengthen the company’s balance sheet. The credit facilities, led by major financial institutions, are designed to enhance Sunstone’s financial flexibility and lower borrowing costs through interest rate swaps, with over 75% of its debt now subject to fixed rates. The company plans to use the proceeds to consolidate its prior loans and repay its revolving credit facility, delaying the draw of $90 million until January 2026 to repay Series A Senior Notes, ensuring no debt maturities until 2028.

The most recent analyst rating on (SHO) stock is a Hold with a $10.00 price target. To see the full list of analyst forecasts on Sunstone Hotel stock, see the SHO Stock Forecast page.

Sunstone Hotel Investors’ Earnings Call: Mixed Sentiments and Strategic Moves

The recent earnings call for Sunstone Hotel Investors revealed a mixed sentiment, highlighting both achievements and challenges. The company showcased strong performances in certain markets and successful capital recycling efforts. However, it also faced significant hurdles, particularly in underperforming markets like Washington, D.C., and a slower-than-expected ramp-up at Andaz Miami Beach. While there are optimistic signs for future quarters, current uncertainties have led to a cautious outlook.

Sunstone Hotel Investors Reports Q2 2025 Earnings

Sunstone Hotel Investors, Inc. is a real estate investment trust (REIT) specializing in the ownership and management of upscale and luxury hotels across the United States, focusing on creating long-term value through strategic acquisitions, active ownership, and dispositions.