Sotherly Hotels (NASDAQ: SOHO) and Ashford Hospitality Trust (NYSE:AHT) are both small-cap hospitality reits companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, profitability, valuation and risk.

Volatility & Risk

Sotherly Hotels has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500. Comparatively, Ashford Hospitality Trust has a beta of 1.47, suggesting that its stock price is 47% more volatile than the S&P 500.

Profitability

This table compares Sotherly Hotels and Ashford Hospitality Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sotherly Hotels 2.01% 3.98% 0.75%
Ashford Hospitality Trust -5.61% -10.79% -1.68%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Sotherly Hotels and Ashford Hospitality Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sotherly Hotels 0 0 1 0 3.00
Ashford Hospitality Trust 0 2 4 0 2.67

Sotherly Hotels currently has a consensus price target of $8.00, suggesting a potential upside of 28.00%. Ashford Hospitality Trust has a consensus price target of $7.50, suggesting a potential upside of 8.07%. Given Sotherly Hotels’ stronger consensus rating and higher probable upside, equities analysts plainly believe Sotherly Hotels is more favorable than Ashford Hospitality Trust.

Earnings and Valuation

This table compares Sotherly Hotels and Ashford Hospitality Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sotherly Hotels $152.85 million 0.57 $920,000.00 ($0.01) -625.00
Ashford Hospitality Trust $1.49 billion 0.45 -$46.28 million ($1.41) -4.92

Sotherly Hotels has higher earnings, but lower revenue than Ashford Hospitality Trust. Sotherly Hotels is trading at a lower price-to-earnings ratio than Ashford Hospitality Trust, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

29.3% of Sotherly Hotels shares are held by institutional investors. Comparatively, 71.0% of Ashford Hospitality Trust shares are held by institutional investors. 13.8% of Sotherly Hotels shares are held by company insiders. Comparatively, 18.2% of Ashford Hospitality Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Sotherly Hotels pays an annual dividend of $0.44 per share and has a dividend yield of 7.0%. Ashford Hospitality Trust pays an annual dividend of $0.48 per share and has a dividend yield of 6.9%. Sotherly Hotels pays out -4,400.0% of its earnings in the form of a dividend. Ashford Hospitality Trust pays out -34.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sotherly Hotels is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Sotherly Hotels beats Ashford Hospitality Trust on 10 of the 16 factors compared between the two stocks.

About Sotherly Hotels

Sotherly Hotels Inc. is a self-managed and self-administered lodging real estate investment trust. The Company is focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the southern United States. The Company operates through the hotel ownership segment. The Company conducts its operations through Sotherly Hotels LP, its Operating Partnership, of which the Company is the general partner. Its portfolio consists of approximately 10 full-service, mainly upscale and upper-upscale hotels located in over eight states with an aggregate of approximately 3,010 rooms and approximately 160,930 square feet of meeting space. All of these hotels are owned by subsidiaries of the Operating Partnership, approximately 10 operate under the Hilton, Crowne Plaza, DoubleTree and Sheraton brands, one is an independent hotel, and all are managed on a day to day basis by MHI Hotels Services, LLC, which does business as Chesapeake Hospitality.

About Ashford Hospitality Trust

Ashford Hospitality Trust, Inc. is an externally-advised real estate investment trust (REIT). The Company is focused on investing in the hospitality industry with a focus on full-service upscale and upper-upscale hotels in the United States. The Company owns its lodging investments and conducts its business through Ashford Hospitality Limited Partnership (Ashford Trust OP), its operating partnership. The Company’s portfolio consists of 121 properties with over 25000 rooms; 86 hotel condominium units at WorldQuest Resort in Orlando, Florida; a 96.6% ownership in Ashford Quantitative Alternatives (U.S.), LP (the AQUA U.S. Fund); a 29.7% ownership in Ashford Inc., and a 13.3% ownership in OpenKey.

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