Sotherly Hotels (SOHO) AI Stock Analysis

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Sotherly Hotels

(NASDAQ:SOHO)

Rating:67Neutral

Price Target:

$1.00

▲(13.64%Upside)

Sotherly Hotels shows positive momentum driven by improved financial performance and strong technical indicators. The earnings call highlighted strategic growth plans but also noted risks from high leverage, adjusted FFO decline, and macroeconomic uncertainties. The valuation remains a concern due to the negative P/E ratio and lack of dividend yield.

Sotherly Hotels (SOHO) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$35.27M

Dividend YieldN/A

Average Volume (3M)42.90K

Price to Earnings (P/E)―

Beta (1Y)0.95

Revenue Growth3.82%

EPS Growth18.62%

CountryUS

Employees9

SectorReal Estate

Sector Strength67

IndustryREIT - Hotel & Motel

Share Statistics

EPS (TTM)0.13

Shares Outstanding20,490,501

10 Day Avg. Volume35,505

30 Day Avg. Volume42,899

Financial Highlights & Ratios

PEG Ratio0.08

Price to Book (P/B)0.90

Price to Sales (P/S)0.00

P/FCF Ratio9.44

Enterprise Value/Market Cap9.45

Enterprise Value/Revenue0.46

Enterprise Value/Gross Profit7.04

Enterprise Value/Ebitda2.00

Forecast

1Y Price Target

$1.00

Price Target Upside13.64% Upside

Rating ConsensusHold

Number of Analyst Covering1

Sotherly Hotels Business Overview & Revenue Model

Company DescriptionSotherly Hotels Inc. (SOHO) is a real estate investment trust (REIT) that specializes in the acquisition, renovation, branding, and repositioning of upscale to upper-upscale full-service hotels in the Southern United States. The company's portfolio primarily consists of properties that operate under premium international brands, catering to both business and leisure travelers. Sotherly's strategy focuses on creating value through the active management of its hotel assets while delivering exceptional guest experiences.

How the Company Makes MoneySotherly Hotels Inc. generates revenue primarily through the operation of its hotel properties. The company's income is derived from room bookings, food and beverage services, and other ancillary services offered at its hotels, such as event hosting and recreational activities. As a REIT, Sotherly also benefits from favorable tax treatments, as long as it complies with certain regulatory requirements, including the distribution of a significant portion of its taxable income as dividends. Additionally, Sotherly's revenue is influenced by strategic partnerships with major hotel brands, which help drive occupancy rates and premium pricing. The company's active asset management approach, including property renovations and brand repositioning, further supports its revenue growth by enhancing the attractiveness and market competitiveness of its hotel properties.

Sotherly Hotels Earnings Call Summary

Earnings Call Date:May 13, 2025

(Q1-2025)

% Change Since: 11.39%|

Next Earnings Date:Aug 07, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong performance in RevPAR growth and urban market recovery, with strategic franchise agreements and renovations planned. However, challenges include ongoing disruptions in Tampa, adjusted FFO decline, debt maturities, and macroeconomic uncertainties impacting future guidance.

Q1-2025 Updates

Positive Updates

RevPAR Improvement

RevPAR increased 6.4% driven by a 6.4% increase in occupancy compared to 2024. Excluding Tampa, RevPAR increased 7.3%.

Key Asset Performance

DoubleTree Resort in Hollywood, Florida saw RevPAR up 11.9%. Hotel Ballast in Wilmington achieved a 6.5% increase in RevPAR. The Whitehall in Houston posted a 19.4% increase in RevPAR.

Urban Market Recovery

Significant occupancy gains in urban markets, with DoubleTree Philadelphia Airport seeing a 34.3% increase in RevPAR and a 38.7% increase in occupancy.

Corporate Activity and Future Plans

Two new 10-year franchise agreements with Hilton in Philadelphia and Jacksonville, with planned renovations totaling $26.1 million.

Hotel EBITDA Growth

Hotel EBITDA increased 9.4% over the prior year, with a 100 basis point increase in margins, excluding one-time benefits from the previous year.

Negative Updates

Tampa Property Disruption

Hotel Alba in Tampa continues to face operational disruptions due to Hurricane Helene, impacting elevator operations and potentially affecting future performance.

Adjusted FFO Decline

Adjusted FFO decreased by approximately $0.7 million from the same quarter last year.

Debt Maturity Challenges

Upcoming debt maturities for major assets in Atlanta and Hollywood, with broader uncertainty in the debt markets affecting refinancing options.

Macroeconomic Uncertainty

Emerging macroeconomic uncertainties, including policy changes, weakening consumer sentiment, and a pullback in government segment demand in Washington, D.C.

Potential Impact on Future Guidance

Given macroeconomic challenges, a more cautious view on operating fundamentals for the back half of the year is being adopted.

Company Guidance

During Sotherly Hotels' Q1 2025 conference call, the company reiterated its full-year guidance, projecting total revenue between $183.4 million and $188.2 million, representing a 2.1% increase at the midpoint over the prior year. Hotel EBITDA is expected to range from $48.8 million to $49.6 million, indicating a 5.2% increase, while adjusted FFO is projected between $11.5 million and $12.3 million, reflecting a 16.4% decrease. The company highlighted a RevPAR increase of 6.4% in Q1, driven by a 6.4% rise in occupancy, with ADR stable year-over-year. Excluding the impact of Hurricane Helene on the Tampa property, RevPAR rose by 7.3%. The call detailed significant gains in urban markets, notably a 34.3% RevPAR rise at DoubleTree Philadelphia Airport, and 19.4% at The Whitehall in Houston, emphasizing strong group business and special event demand. The company plans to spend $7.2 million on routine capital expenditures in 2025, with additional investments for renovations in Philadelphia and Jacksonville, totaling $11.4 million this year.

Sotherly Hotels Financial Statement Overview

Summary

Sotherly Hotels demonstrates a recovery trajectory with improved income and cash flow metrics, while high leverage remains a concern. The company benefits from stable revenue growth and profitability improvements, yet financial risks from high debt levels persist. Continued focus on cash flow enhancements and debt management will be crucial for sustained financial health.

Income Statement

Positive

Sotherly Hotels' income statement shows a steady revenue growth trend with a TTM revenue increase from $181.89M to $183.66M. Gross profit margin remains solid at approximately 25.8%, with an EBIT margin of 11.5% and an EBITDA margin of 24.9%. However, the net profit margin has been volatile, with the TTM net income showing improvement to $4.65M. Despite past challenges, profitability is on an upward trajectory.

Balance Sheet

Neutral

The balance sheet indicates high leverage with a significant debt-to-equity ratio of over 500, reflecting potential financial risk. The equity ratio stands at approximately 11%, indicating limited equity relative to total assets. Return on equity is improving, shown by the TTM net income growth. Despite high debt levels, the company's financial position has shown gradual recovery.

Cash Flow

Neutral

Cash flow analysis shows positive operating cash flow with a TTM value of $26M, consistent with historical data. Free cash flow has improved with a positive TTM figure, indicating better cash management. However, the free cash flow to net income ratio suggests that cash flow generation relative to net income could be more robust. Overall, cash flows are stabilizing but remain an area to monitor.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
183.66M	181.89M	173.84M	166.08M	127.59M	71.50M
	Gross Profit
47.37M	46.81M	44.79M	46.46M	30.89M	-3.22M
	EBIT
21.09M	20.65M	18.93M	20.55M	-8.06M	-29.75M
	EBITDA
45.68M	41.58M	39.88M	72.91M	14.08M	-10.70M
	Net Income Common Stockholders
4.65M	1.30M	3.94M	32.54M	-26.22M	-49.19M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
11.51M	7.33M	17.10M	21.92M	13.17M	25.30M
	Total Assets
418.09M	414.38M	393.44M	406.57M	436.05M	473.03M
	Total Debt
23.65B	340.38M	317.53M	323.03M	377.91M	386.96M
	Net Debt
12.14B	333.05M	300.42M	301.11M	364.74M	372.38M
	Total Liabilities
373.43B	372.78M	345.54M	355.05M	419.55M	428.83M
	Stockholders Equity
46.07M	43.05M	49.23M	52.25M	21.26M	49.08M
Cash Flow		Free Cash Flow
26.00M	25.89M	21.40M	-1.31M	-854.34K	-15.28M
	Operating Cash Flow
26.00M	25.89M	21.40M	6.66M	2.32M	-11.26M
	Investing Cash Flow
-12.25M	-14.14M	-6.73M	46.66M	-2.39M	-3.78M
	Financing Cash Flow
-20.57M	-9.27M	-15.78M	-51.55M	-9.66M	22.36M

Sotherly Hotels Technical Analysis

Technical Analysis Sentiment

Positive

Last Price0.88

Price Trends

50DMA

0.75

Positive

100DMA

0.78

Positive

200DMA

0.94

Negative

Market Momentum

MACD

0.03

Negative

RSI

61.94

Neutral

STOCH

81.42

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SOHO, the sentiment is Positive. The current price of 0.88 is above the 20-day moving average (MA) of 0.81, above the 50-day MA of 0.75, and below the 200-day MA of 0.94, indicating a neutral trend. The MACD of 0.03 indicates Negative momentum. The RSI at 61.94 is Neutral, neither overbought nor oversold. The STOCH value of 81.42 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SOHO.

Sotherly Hotels Risk Analysis

Sotherly Hotels disclosed 67 risk factors in its most recent earnings report. Sotherly Hotels 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

Sotherly Hotels Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BHR	67 Neutral	$166.95M	―	-0.90%	8.03%	-2.42%	23.64%
SOHO	67 Neutral	$35.27M	―	9.72%	―	3.82%	18.62%
CLDT	66 Neutral	$354.16M	125.52	1.42%	5.00%	1.75%	―
INN	64 Neutral	$606.17M	38.18	4.45%	6.81%	-1.86%	―
Sector *	61 Neutral	$2.85B	10.72	0.40%	6.07%	5.80%	-21.26%
AHT	46 Neutral	$35.34M	―	-25.85%	―	-14.65%	-55.62%
IHT	44 Neutral	$27.84M	―	-25.66%	0.86%	4.55%	-291.14%

* Real Estate Sector Average

Performance Comparison

SOHO

Sotherly Hotels

0.86

-0.36

-29.51%

INN

Summit Hotel Properties

4.57

-0.95

-17.21%

CLDT

Chatham Lodging

6.95

-1.11

-13.77%

AHT

Ashford Hospitality

5.85

-3.65

-38.42%

BHR

Braemar Hotels & Resorts

2.40

-0.14

-5.51%

IHT

InnSuites Hospitality

2.29

0.42

22.46%

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.