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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#2970
Positioning
Market Dominance
Retail Trade
Restaurants, Hotels, Motels
$1.8B
Bryan A. Giglia
Sunstone Hotel Investors, Inc. has interests in 19 hotels comprised of 9,997 rooms. Sunstone's business is to acquire, own, asset manage and renovate or reposition hotels considered to be Long-Term Relevant Real Estate.
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Dates updated upon official exchange announcement.
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X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = SHO ANALYSIS TARGET
| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$ARCO Arcos Dorados Holdings Inc. | 73 | 85 | 89 | 65 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$IMKTA INGLES MARKETS INC | 70 | 73 | 89 | 76 | 11.3x | 4.1x | 6.9% | 4.1% | 24.3% | 2.8% | 1.9% | -3.4% | 1.1% | 33.0x | $1.2B | VS | |
$SGU STAR GROUP, L.P. | 69 | 82 | 79 | 63 | - | - | -25.2% | -10.6% | 28.1% | -6.3% | -5.4% | -7.8% | 6.1% | 57.0x | $396M | VS | |
$EZPW EZCORP INC | 68 | 77 | 82 | 89 | 7.2x | 4.2x | 12.0% | 6.2% | 59.1% | 11.6% | 8.5% | 10.5% | 0.0% | 52.0x | $764M | VS | |
$HTHT H World Group Ltd | 68 | 91 | 44 | 84 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$DDL Dingdong (Cayman) Ltd | 68 | 86 | 82 | 57 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$SBH Sally Beauty Holdings, Inc. | 68 | 83 | 92 | 77 | 5.1x | 2.3x | 32.0% | 6.6% | 51.5% | 8.4% | 4.9% | -1.0% | 0.0% | 178.0x | $934M | VS | |
$SPH SUBURBAN PROPANE PARTNERS LP | 67 | 80 | 90 | 53 | - | 13.0x | 0.4% | -3.5% | 61.7% | 2.1% | -5.7% | 2.2% | 7.1% | 190.0x | $1.2B | VS | |
$IHG INTERCONTINENTAL HOTELS GROUP PLC /NEW/ | 67 | 63 | 81 | 67 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$ROST ROSS STORES, INC. | 67 | 63 | 55 | 83 | 25.2x | 16.5x | 34.8% | 13.3% | 28.0% | 11.6% | 9.1% | 10.4% | 1.0% | 26.0x | $51.6B | VS | |
$SHO Sunstone Hotel Investors, Inc. | 44 | 30 | 49 | 42 | 86.7x | 13.0x | 1.1% | 0.7% | 59.0% | 7.8% | 2.1% | -7.3% | 3.8% | 47.0x | $1.8B | ||
| SECTOR BENCH | - | - | - | - | - | 21.4x | 9.1x | 9.6% | 3.6% | 37.3% | 4.4% | 2.4% | 3.7% | 0.0% | 0.7x | - | REF |
Sunstone Hotel Investors, Inc. (SHO) receives a "Reduce" rating with a composite score of 44.0/100. It ranks #2970 out of 7,333 stocks in our coverage universe and carries a 2-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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In-line with peers — no strong momentum signal
Fair valuation relative to peers
Weak fundamentals — higher risk of value trap
Low volatility — smoother ride and historically better risk-adjusted returns
Aggressive spending — empire-building risk, dilutive growth
Mid-range overall rating
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Relative valuation derived from Retail Trade sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
Projection based on user-defined inputs. Re-calculated daily against current market data.
Reverse DCF Framework — Mauboussin Methodology
Institutional-grade Reverse DCF analysis. This model identifies the growth hurdles embedded in current market prices. When implied growth is significantly lower than historical or projected rates, a margin of safety may exist. Re-audited daily.
No analyst ratings for SHO.
View All Ratings| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 30 | 11 | +19ALPHA |
| MOMENTUM | 42 | 40 | +2NEUTRAL |
| VALUATION | 49 | 52 | -3NEUTRAL |
| INVESTMENT | 31 | 34 | -3NEUTRAL |
| STABILITY | 75 | 82 | -7DRAG |
| SHORT INT | 35 | 24 | +11ALPHA |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROIC 1.2% vs WACC 6.8% (spread -5.7%)
GM 59% vs sector 37%, OM 8% vs sector 4%
Capital turnover 0.29x
Rev growth -7%, 10yr history
Interest coverage 0.9x, Net debt/EBITDA 17.4x
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
We rate Sunstone Hotel Investors, Inc. (SHO) as a Reduce with a composite score of 44.0/100 at a current price of $9.25. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential.
Sunstone Hotel Investors, Inc. holds a top-quartile position (#0 of 50) within the Retail Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 44.0/100 places it at rank #2970 in our full universe.
No Moat
Medium
Standard
Fair Value
Gross margins of 59% signal strong pricing power.
Stable competitive position in a defensive sector.
Elevated P/E ratio of 86.7x leaves little room for execution misses.
Below-average quality raises earnings sustainability concerns.
Vulnerability to macroeconomic shocks and interest rate volatility.
Sunstone Hotel Investors, Inc. represents a reduce based on multi-factor quantitative performance.
Sunstone Hotel Investors, Inc. receives a Reduce rating from our analysis, with a composite score of 44.0/100 and 2 out of 5 stars, ranking #2970 out of 7,333 stocks. SHO's factor profile shows weakness across multiple dimensions, suggesting the stock may underperform going forward. Existing holders may want to consider trimming positions or tightening stop-losses.
SHO's quality score of 30/100 is below average, suggesting challenges with profitability or capital efficiency. The company reports a return on equity of 1.1% (sector avg: 9.6%), gross margins of 59.0% (sector avg: 37.3%), net margins of 2.1% (sector avg: 2.4%). Investors should examine whether management is actively addressing these weaknesses or if they reflect structural industry headwinds.
With a value score of 49/100, SHO appears somewhat expensive relative to its fundamentals. Key valuation metrics include a P/E ratio of 86.65x, an EV/EBITDA of 13.04x, a P/B ratio of 0.91x. Investors paying a premium here are likely betting on above-average growth or margin expansion to justify current prices.
Sunstone Hotel Investors, Inc.'s investment score of 31/100 suggests limited reinvestment activity. Key growth metrics include revenue growth of -7.3% vs. a sector average of 3.7% and a return on assets of 0.7% (sector: 3.6%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
SHO is currently showing below-average momentum at 42/100, which may indicate weakening institutional interest or negative sentiment shifts. Revenue growth stands at -7.3% year-over-year, while a beta of 1.04 reflects its sensitivity to broader market moves. Investors should note that declining momentum can precede further price weakness, though contrarian opportunities sometimes emerge at these levels.
SHO shows good financial stability with a score of 75/100. Key stability metrics include a beta of 1.04 and a debt-to-equity ratio of 47.00x (sector avg: 0.7x). This suggests manageable leverage and moderate price volatility, making it appropriate for investors seeking a balance between growth potential and capital preservation.
Sunstone Hotel Investors, Inc.'s short interest score of 35/100 reveals significant bearish positioning, suggesting institutional investors are actively betting against the stock. Specific risk factors include elevated leverage (D/E: 47.00x), small-cap liquidity risk. At $1.8B (small-cap), SHO carries meaningful risk and is best suited for investors with high risk tolerance who have thoroughly evaluated the bear thesis.
SHO pays a solid dividend yield of 3.8%, contributing an income component to total returns. This moderate yield suggests a balance between returning capital to shareholders and retaining earnings for reinvestment — a common profile among quality compounders.
Sunstone Hotel Investors, Inc. is a small-cap company in the Retail Trade sector, ranked #0 of 50 in its sector (100th percentile) and #2970 of 7,333 overall (59th percentile). Key comparisons include ROE of 1.1% trailing the 9.6% sector median and operating margins of 7.8% above the 4.4% sector average. This top-quartile standing reflects exceptional competitive strength relative to Retail Trade peers.
While SHO currently exhibits a REDUCE profile, superior opportunities exist within the RETAIL TRADE sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
View Top Retail Trade Alpha →Quant Factor Profile
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Improvement in Quality (30) would have the largest impact on the composite score.
EV/EBITDA 43% ABOVE SECTOR MEDIAN
ROE 89% BELOW SECTOR MEDIAN
Gross Margin 58% ABOVE SECTOR MEDIAN (FAVORABLE)
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Over the past year, Sunstone Hotel Investors has benefited from a recovering lodging market, steady dividend growth, and active portfolio reshaping through asset sales and selective acquisitions in high barrier to entry locations. Management’s emphasis on ongoing renovations and asset repositioning to enhance competitive strength, supported by stable business and leisure travel demand, is increasingly central to the company’s long-term investment story. We’ll now examine how Sunstone Hotel...

The headline numbers for Sunstone Hotel (SHO) give insight into how the company performed in the quarter ended March 2024, but it may be worthwhile to compare some of its key metrics to Wall Street estimates and the year-ago actuals.

Sunstone Hotel (SHO) delivered FFO and revenue surprises of 12.50% and 2.44%, respectively, for the quarter ended March 2024. Do the numbers hold clues to what lies ahead for the stock?

The heavy selling pressure might have exhausted for Sunstone Hotel (SHO) as it is technically in oversold territory now. In addition to this technical measure, strong agreement among Wall Street analysts in revising earnings estimates higher indicates that the stock is ripe for a trend reversal.
Above 50MA
37.18%
Net New Highs
+51081