DiamondRock Hospitality (NYSE:DRH) and Saul Centers (NYSE:BFS) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, dividends, valuation, institutional ownership, profitability, risk and analyst recommendations.
Insider and Institutional Ownership
46.7% of Saul Centers shares are owned by institutional investors. 0.9% of DiamondRock Hospitality shares are owned by company insiders. Comparatively, 48.5% of Saul Centers shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This table compares DiamondRock Hospitality and Saul Centers’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|DiamondRock Hospitality||$863.70 million||2.53||$87.78 million||$1.02||10.60|
|Saul Centers||$227.90 million||5.27||$50.55 million||$3.11||16.97|
DiamondRock Hospitality has higher revenue and earnings than Saul Centers. DiamondRock Hospitality is trading at a lower price-to-earnings ratio than Saul Centers, indicating that it is currently the more affordable of the two stocks.
DiamondRock Hospitality pays an annual dividend of $0.50 per share and has a dividend yield of 4.6%. Saul Centers pays an annual dividend of $2.12 per share and has a dividend yield of 4.0%. DiamondRock Hospitality pays out 49.0% of its earnings in the form of a dividend. Saul Centers pays out 68.2% 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. Saul Centers has increased its dividend for 5 consecutive years. DiamondRock Hospitality is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of recent recommendations and price targets for DiamondRock Hospitality and Saul Centers, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
DiamondRock Hospitality presently has a consensus target price of $10.36, suggesting a potential downside of 4.15%. Saul Centers has a consensus target price of $58.00, suggesting a potential upside of 9.87%. Given Saul Centers’ stronger consensus rating and higher probable upside, analysts plainly believe Saul Centers is more favorable than DiamondRock Hospitality.
This table compares DiamondRock Hospitality and Saul Centers’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility and Risk
DiamondRock Hospitality has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500. Comparatively, Saul Centers has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.
Saul Centers beats DiamondRock Hospitality on 11 of the 17 factors compared between the two stocks.
About DiamondRock Hospitality
DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations. The Company owns 31 premium quality hotels with over 10,000 rooms. The Company has strategically positioned its hotels to be operated both under leading global brand families such as Hilton and Marriott as well as unique boutique hotels in the lifestyle segment.
About Saul Centers
Saul Centers, Inc. is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland, which currently operates and manages a real estate portfolio of 60 properties which includes (a) 49 community and neighborhood shopping centers and seven mixed-use properties with approximately 9.3 million square feet of leasable area and (b) four land and development properties. Over 85% of the Saul Centers' property operating income is generated by properties in the metropolitan Washington, DC/Baltimore area.
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