Critical Contrast: Sunstone Hotel Investors (NYSE:SHO) versus Clipper Realty (NYSE:CLPR)

Clipper Realty (NYSE:CLPR) and Sunstone Hotel Investors (NYSE:SHO) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, profitability, institutional ownership, analyst recommendations, risk and valuation.

Insider & Institutional Ownership

37.6% of Clipper Realty shares are held by institutional investors. Comparatively, 99.4% of Sunstone Hotel Investors shares are held by institutional investors. 54.6% of Clipper Realty shares are held by company insiders. Comparatively, 1.4% of Sunstone Hotel Investors shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Clipper Realty and Sunstone Hotel Investors, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Clipper Realty	0	1	0	0	2.00
Sunstone Hotel Investors	0	5	2	1	2.50

Sunstone Hotel Investors has a consensus price target of $10.83, suggesting a potential downside of 7.68%. Given Sunstone Hotel Investors’ stronger consensus rating and higher probable upside, analysts clearly believe Sunstone Hotel Investors is more favorable than Clipper Realty.

Profitability

This table compares Clipper Realty and Sunstone Hotel Investors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Clipper Realty	-7.10%	N/A	-0.87%
Sunstone Hotel Investors	3.84%	2.27%	1.25%

Volatility and Risk

Clipper Realty has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500. Comparatively, Sunstone Hotel Investors has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500.

Dividends

Clipper Realty pays an annual dividend of $0.38 per share and has a dividend yield of 13.1%. Sunstone Hotel Investors pays an annual dividend of $0.36 per share and has a dividend yield of 3.1%. Clipper Realty pays out -46.9% of its earnings in the form of a dividend. Sunstone Hotel Investors pays out 327.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sunstone Hotel Investors has raised its dividend for 2 consecutive years. Clipper Realty is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Clipper Realty and Sunstone Hotel Investors”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Clipper Realty	$151.92 million	0.31	-$19.90 million	($0.81)	-3.58
Sunstone Hotel Investors	$960.13 million	2.28	$24.57 million	$0.11	106.68

Sunstone Hotel Investors has higher revenue and earnings than Clipper Realty. Clipper Realty is trading at a lower price-to-earnings ratio than Sunstone Hotel Investors, indicating that it is currently the more affordable of the two stocks.

Summary

Sunstone Hotel Investors beats Clipper Realty on 14 of the 18 factors compared between the two stocks.

About Clipper Realty

Clipper Realty Inc. (NYSE: CLPR) is a self-administered and self-managed real estate company that acquires, owns, manages, operates, and repositions multifamily residential and commercial properties in the New York metropolitan area, with a portfolio in Manhattan and Brooklyn.

About Sunstone Hotel Investors

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust ("REIT") that as of the date of this release owns 14 hotels comprised of 6,675 rooms, the majority of which are operated under nationally recognized brands. Sunstone's strategy is to create long-term stakeholder value through the acquisition, active ownership, and disposition of well-located hotel and resort real estate.