BHR

We rate Braemar Hotels & Resorts Inc. (BHR) as a Hold with a composite score of 58.9/100 at a current price of $3.06. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in value (82th percentile) and momentum (72th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (20th percentile) and investment (34th percentile) tempers our overall conviction. We assign a No Moat rating (19/100), High uncertainty, and Standard capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Braemar Hotels & Resorts Inc. holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 58.9/100 places it at rank #793 in our full 7,333-stock universe. At $183M in market capitalization, Braemar Hotels & Resorts Inc. is a small-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (72th percentile), revenue contraction of -23% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 22% (-54.5pp vs sector) narrow to operating margins of 24% (+6.8pp vs sector) and net margins of 7.8%, yielding a gross-to-net conversion rate of 36%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $3.06, Braemar Hotels & Resorts Inc. appears undervalued relative to its fundamentals. Our value factor score of 82/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 4.3x (a 64% discount to the sector median of 11.9x), EV/EBITDA of 5.5x (discounted to peers), P/B of 1.0x, P/S of 0.3x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to Braemar Hotels & Resorts Inc.. Key risk factors include significant leverage (560% debt-to-equity), below-average price stability (20th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (560% debt-to-equity); below-average price stability (20th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 20th percentile and quality factor at the 59th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: a 7.45% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Braemar Hotels & Resorts Inc.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 23.3%, and the balance sheet is managed within acceptable parameters (D/E: 560%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Braemar Hotels & Resorts Inc. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 7.45% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Braemar Hotels & Resorts Inc. receives a Hold rating with a composite score of 58.9/100 (rank #793 of 7,333). Our quantitative framework assigns a No Moat (19/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 53/100.

Our analysis supports a neutral stance on Braemar Hotels & Resorts Inc.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.