Critical Contrast: UDR (NYSE:UDR) vs. Sotherly Hotels (NASDAQ:SOHO)

Sotherly Hotels (NASDAQ:SOHO) and UDR (NYSE:UDR) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, earnings, institutional ownership and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sotherly Hotels	7.89%	27.16%	3.35%
UDR	28.00%	11.50%	4.14%

Institutional and Insider Ownership

26.1% of Sotherly Hotels shares are owned by institutional investors. Comparatively, 91.7% of UDR shares are owned by institutional investors. 15.9% of Sotherly Hotels shares are owned by company insiders. Comparatively, 4.5% of UDR shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

Sotherly Hotels has a beta of 1.71, indicating that its share price is 71% more volatile than the S&P 500. Comparatively, UDR has a beta of 0.77, indicating that its share price is 23% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Sotherly Hotels and UDR, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sotherly Hotels	0	1	0	0	2.00
UDR	0	7	11	0	2.61

Sotherly Hotels presently has a consensus target price of $2.25, indicating a potential upside of 20.32%. UDR has a consensus target price of $47.03, indicating a potential upside of 18.37%. Given Sotherly Hotels’ higher possible upside, analysts clearly believe Sotherly Hotels is more favorable than UDR.

Valuation and Earnings

This table compares Sotherly Hotels and UDR’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sotherly Hotels	$173.06 million	0.21	$32.54 million	$0.30	6.23
UDR	$1.60 billion	8.21	$86.92 million	$1.34	29.65

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

Dividends

Sotherly Hotels pays an annual dividend of $0.52 per share and has a dividend yield of 27.8%. UDR pays an annual dividend of $1.68 per share and has a dividend yield of 4.2%. Sotherly Hotels pays out 173.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. UDR pays out 125.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. UDR has raised its dividend for 14 consecutive years.

Summary

UDR beats Sotherly Hotels on 12 of the 17 factors compared between the two stocks.

About Sotherly Hotels

Sotherly Hotels Inc. is a self-managed and self-administered lodging REIT focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the Southern United States. Sotherly may also opportunistically acquire hotels throughout the United States. Currently, the Company's portfolio consists of investments in ten hotel properties, comprising 2,786 rooms, as well as interests in two condominium hotels and their associated rental programs. The Company owns hotels that operate under the Hilton Worldwide and Hyatt Hotels Corporation brands, as well as independent hotels. Sotherly Hotels Inc. was organized in 2004 and is headquartered in Williamsburg, Virginia.

About UDR

UDR, Inc. (NYSE: UDR), an S&P 500 company, is a leading multifamily real estate investment trust with a demonstrated performance history of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate communities in targeted U.S. markets. As of June 30, 2023, UDR owned or had an ownership position in 58,412 apartment homes including 415 homes under development. For over 51 years, UDR has delivered long-term value to shareholders, the best standard of service to Residents and the highest quality experience for Associates.