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Service Properties Trust (SVC)
NASDAQ:SVC
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Service Properties
(NASDAQ:SVC)
62Neutral
Service Properties (SVC) vs. S&P 500 (SPY)
Market Cap
$438.25M
Dividend Yield15.97%
Average Volume (3M)2.29M
Price to Earnings (P/E)―
Beta (1Y)0.87
Revenue Growth1.22%
EPS Growth-743.18%
CountryUS
EmployeesN/A
SectorReal Estate
Sector Strength69
IndustryREIT - Hotel & Motel
Share Statistics
EPS (TTM)-1.66
Shares Outstanding166,636,540
10 Day Avg. Volume2,261,047
30 Day Avg. Volume2,285,959
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.25
Price to Cash Flow (P/CF)-12.10
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$4.00Price Target Upside52.09% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Service Properties Business Overview & Revenue Model
Company DescriptionService Properties Trust is a real estate investment trust, or REIT, which owns a diverse portfolio of hotels and net lease service and necessity-based retail properties across the United States and in Puerto Rico and Canada with 149 distinct brands across 23 industries. SVC's properties are primarily operated under long-term management or lease agreements. SVC is managed by the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), or RMR Inc., an alternative asset management company that is headquartered in Newton, Massachusetts.
How the Company Makes MoneyService Properties Trust generates revenue primarily through the leasing and management of its property assets. The company's key revenue streams include rental income from long-term leases with hotel operators and retail tenants, as well as management fees from overseeing the operations of its properties. SVC benefits from strategic partnerships with well-known hotel brands and retail chains, which help to maintain high occupancy rates and stable cash flows. Additionally, the company may earn revenue from property sales or dispositions, though this is not a primary focus of its business model.
Service Properties Financial Statement Overview
Summary
Service Properties is showing signs of revenue growth and improved operational efficiency, but profitability remains a concern with consistent net losses. The balance sheet reflects significant leverage, posing financial risk. Cash flow generation is positive but declining, highlighting the need for more sustainable cash flow management. The company faces challenges that need to be addressed to enhance financial stability and investor confidence.Income Statement
Service Properties has experienced a steady revenue growth of 1.23% from 2022 to 2023 and 1.23% from 2023 to 2024. However, the company's net income has been negative for the past several years, with a notable decline in profitability as indicated by a negative net profit margin of -14.52% in 2024. The gross profit margin has improved significantly to 100% in 2024 due to a reporting anomaly where gross profit equals total revenue, suggesting potential reporting issues. Despite these challenges, the EBIT margin has improved over time, reaching 32.82% in 2024, indicating better operational efficiency.65
Positive
Balance Sheet
The balance sheet shows some improvement in equity levels, with stockholders' equity increasing from 2023 to 2024. The debt-to-equity ratio improved drastically as total debt was reported as zero in 2024, which may be due to reporting adjustments. The equity ratio is relatively low at 11.97% in 2024, indicating high leverage and potential financial risk. The return on equity is negative, reflecting ongoing profitability challenges.58
Neutral
Cash Flow
Operating cash flow decreased significantly from 2023 to 2024, reflecting challenges in cash generation from core operations. However, free cash flow remains positive, albeit with a decline, suggesting some flexibility in managing capital expenditures. The operating cash flow to net income ratio is positive, indicating some level of operational cash generation despite net losses.62
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.90B | 1.87B | 1.86B | 1.50B | 1.27B | Gross Profit |
| 602.96M | 632.29M | 635.65M | 484.84M | 567.35M | EBIT |
| 0.00 | 253.30M | 180.34M | -69.56M | 2.85M | EBITDA |
| 462.63M | 664.80M | 581.45M | 286.05M | 501.76M | Net Income Common Stockholders |
| -275.53M | -32.78M | -135.24M | -543.66M | -301.47M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 143.48M | 180.12M | 38.37M | 944.04M | 73.33M | Total Assets |
| 7.12B | 7.36B | 7.49B | 9.15B | 8.69B | Total Debt |
| 5.71B | 5.52B | 5.66B | 7.14B | 6.21B | Net Debt |
| 5.57B | 5.34B | 5.62B | 6.20B | 6.14B | Total Liabilities |
| 6.27B | 6.13B | 6.10B | 7.60B | 6.58B | Stockholders Equity |
| 851.87M | 1.23B | 1.39B | 1.56B | 2.10B |
| Cash Flow | Free Cash Flow | |||
| 139.39M | 485.55M | 293.55M | 151.23M | -152.43M | Operating Cash Flow |
| 139.39M | 485.55M | 243.13M | 49.90M | 37.60M | Investing Cash Flow |
| -222.86M | -29.58M | 397.25M | -101.31M | -51.81M | Financing Cash Flow |
| 43.02M | -303.56M | -1.54B | 907.37M | 24.40M |
Service Properties Technical Analysis
Negative
2.63
Price Trends
2.73
Negative
2.72
Negative
3.71
Negative
Market Momentum
<0.01
Negative
46.43
Neutral
41.87
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SVC, the sentiment is Negative. The current price of 2.63 is below the 20-day moving average (MA) of 2.72, below the 50-day MA of 2.73, and below the 200-day MA of 3.71, indicating a bearish trend. The MACD of <0.01 indicates Negative momentum. The RSI at 46.43 is Neutral, neither overbought nor oversold. The STOCH value of 41.87 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SVC.
Service Properties Risk Analysis
Service Properties disclosed 58 risk factors in its most recent earnings report. Service Properties 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
Service Properties Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $9.98B | 14.41 | 10.53% | 5.61% | 7.02% | -4.78% | |
72 Outperform | $3.09B | 14.50 | 6.50% | 7.46% | 6.52% | 14.45% | |
62 Neutral | $438.25M | ― | -26.52% | 15.97% | 1.22% | -743.18% | |
61 Neutral | $4.71B | 17.72 | -2.95% | 11.43% | 6.02% | -21.34% | |
60 Neutral | $1.60B | 42.21 | 2.98% | 1.57% | 5.12% | -49.88% | |
58 Neutral | $1.22B | ― | -0.16% | 0.39% | 2.35% | 57.81% | |
58 Neutral | $1.22B | 29.30 | 2.94% | 6.23% | 3.31% | -15.16% |
* Real Estate Sector Average
Performance Comparison
SVC
Service Properties
2.63
-3.64
-58.05%
DRH
Diamondrock
7.64
-1.50
-16.41%
HST
Host Hotels & Resorts
14.27
-5.64
-28.33%
PEB
Pebblebrook Hotel
10.15
-5.19
-33.83%
RLJ
RLJ Lodging
8.02
-3.20
-28.52%
APLE
Apple Hospitality REIT
12.87
-2.46
-16.05%
Service Properties Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -1.13% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a balanced outlook with strong revenue growth and successful asset sales marking significant highlights. However, challenges such as declining adjusted hotel EBITDA and increased interest expenses offer some counterpoints. The positive aspects, including robust select service portfolio growth and strategic asset sales, provide a strong positive narrative, while the lowlights highlight areas for improvement.Highlights
Strong Hotel Revenue Growth
SBC reported its strongest hotel revenue growth in nearly two years, with comparable hotel RevPAR growing 4.2% year over year, outperforming the industry by 60 basis points.
Successful Asset Sales and Strong Buyer Interest
SBC is marketing the sale of 114 Sonesta hotels, with a buyer pool that is deep and well-capitalized, resulting in more than fifty sub-portfolio bids. The expected net sales proceeds are at least $1 billion.
Exceptional Select Service Portfolio Growth
The select service portfolio saw RevPAR growth of 9.6% year over year, driven by occupancy growth in Hyatt Place and Sonesta Select portfolios.
Stable Net Lease Portfolio Performance
The net lease portfolio had a 97.6% lease rate with a weighted average lease term of eight years, generating stable cash flows with annual minimum rents of $381 million.
Growth in Retained Hotel Portfolio
The 83 retained hotels experienced a RevPAR increase of 6.3% to approximately $101 and adjusted hotel EBITDA increase of 10% year over year to $30.6 million.
Lowlights
Decline in Adjusted Hotel EBITDA
Adjusted hotel EBITDA declined 2.4% year over year, impacted by renovation activities and increased expenses, including labor and real estate taxes.
Increase in Interest Expenses
There was a $9.4 million increase in interest expense, coupled with an $8.4 million decline in interest income, affecting financial results.
Lower Margins Due to Renovations
The gross operating profit margin percentage declined by 160 basis points to 25.3%, with GOP flat compared to the prior year period, primarily due to renovation disruptions.
Company Guidance
During the Service Properties Trust Q4 2024 earnings call, guidance was provided on several financial metrics and strategic initiatives. The company reported a 4.2% year-over-year increase in comparable hotel RevPAR, with a more substantial 6.8% rise excluding hotels under renovation. Adjusted hotel EBITDA declined by 2.4% due to renovation and expense pressures, while full-service hotel RevPAR grew by 4.3%. The select service portfolio achieved a notable 9.6% RevPAR growth, driven by occupancy increases. The company is executing a sale of 114 Sonesta hotels, expecting at least $1 billion in proceeds, and aims to reduce leverage. The net lease portfolio, comprising 742 properties with annual rents of $381 million, was 97.6% leased, with a weighted average lease term of eight years. For Q1 2025, the company projects RevPAR between $82 and $84 and adjusted hotel EBITDA between $20 million and $24 million. Capital expenditure for 2025 is expected to be around $250 million, focusing on renovations and maintenance. The company prioritized addressing 2026 debt maturities, investing in remaining hotels, and expanding the net lease portfolio.Service Properties Corporate Events
Executive/Board ChangesM&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Service Properties Trust Announces Strategic Portfolio Optimization
Positive
Mar 12, 2025
On March 12, 2025, Service Properties Trust announced its strategic initiatives aimed at optimizing its portfolio and financial position. The company reported a 4.2% growth in comparable Hotel RevPAR in Q4 2024 and completed the sale of eight hotels and three net lease properties for $51.1 million. Service Properties Trust plans to sell an additional 115 hotels, expecting to generate approximately $1.1 billion in proceeds, which will be used to address its 2026 debt maturities. The company also completed renovations at 28 hotels and appointed Chris Bilotto as President and CEO.
Executive/Board Changes
Service Properties Appoints Christopher Bilotto as CEO
Positive
Mar 10, 2025
On March 10, 2025, Service Properties appointed Christopher J. Bilotto as Managing Trustee, President, and CEO, succeeding John G. Murray and Todd W. Hargreaves. Mr. Bilotto, previously an executive at The RMR Group LLC, brings extensive experience in asset management and property development, enhancing the company’s leadership and strategic direction.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.