Comparing DiamondRock Hospitality (NYSE:DRH) & Terreno Realty (NYSE:TRNO)

Terreno Realty (NYSE:TRNO) and DiamondRock Hospitality (NYSE:DRH) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Volatility & Risk

Terreno Realty has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500. Comparatively, DiamondRock Hospitality has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500.

Profitability

This table compares Terreno Realty and DiamondRock Hospitality’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Terreno Realty	59.56%	6.71%	5.28%
DiamondRock Hospitality	6.04%	4.23%	2.17%

Analyst Ratings

This is a breakdown of current recommendations for Terreno Realty and DiamondRock Hospitality, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Terreno Realty	0	7	3	0	2.30
DiamondRock Hospitality	0	5	1	0	2.17

Terreno Realty currently has a consensus target price of $62.89, suggesting a potential upside of 9.08%. DiamondRock Hospitality has a consensus target price of $8.63, suggesting a potential upside of 3.42%. Given Terreno Realty’s stronger consensus rating and higher possible upside, research analysts plainly believe Terreno Realty is more favorable than DiamondRock Hospitality.

Earnings & Valuation

This table compares Terreno Realty and DiamondRock Hospitality”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Terreno Realty	$382.62 million	15.57	$184.50 million	$2.52	22.88
DiamondRock Hospitality	$1.13 billion	1.51	$48.05 million	$0.26	32.08

Terreno Realty has higher earnings, but lower revenue than DiamondRock Hospitality. Terreno Realty is trading at a lower price-to-earnings ratio than DiamondRock Hospitality, indicating that it is currently the more affordable of the two stocks.

Dividends

Terreno Realty pays an annual dividend of $1.96 per share and has a dividend yield of 3.4%. DiamondRock Hospitality pays an annual dividend of $0.32 per share and has a dividend yield of 3.8%. Terreno Realty pays out 77.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DiamondRock Hospitality pays out 123.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Terreno Realty has raised its dividend for 5 consecutive years and DiamondRock Hospitality has raised its dividend for 1 consecutive years.

Summary

Terreno Realty beats DiamondRock Hospitality on 11 of the 15 factors compared between the two stocks.

About Terreno Realty

Terreno Realty Corporation (Terreno, and together with its subsidiaries, the Company) acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C. All square feet, acres, occupancy and number of properties disclosed in these notes to the consolidated financial statements are unaudited. As of December 31, 2023, the Company owned 259 buildings aggregating approximately 16.0 million square feet, 45 improved land parcels consisting of approximately 152.4 acres, seven properties under development or redevelopment and approximately 62.7 acres of land entitled for future development. The Company is an internally managed Maryland corporation and elected to be taxed as a real estate investment trust (REIT) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the Code), commencing with its taxable year ended December 31, 2010.

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 leisure destinations and top gateway markets. The Company currently owns 36 premium quality hotels with over 9,700 rooms. The Company has strategically positioned its portfolio to be operated both under leading global brand families as well as independent boutique hotels in the lifestyle segment.