Sotherly Hotels (NASDAQ:SOHO) & NNN REIT (NYSE:NNN) Critical Contrast

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

Institutional & Insider Ownership

90.0% of NNN REIT shares are owned by institutional investors. Comparatively, 27.5% of Sotherly Hotels shares are owned by institutional investors. 0.8% of NNN REIT shares are owned by insiders. Comparatively, 14.9% of Sotherly Hotels shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares NNN REIT and Sotherly Hotels’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NNN REIT	43.22%	8.95%	4.29%
Sotherly Hotels	-0.15%	-0.64%	-0.06%

Analyst Recommendations

This is a summary of current recommendations and price targets for NNN REIT and Sotherly Hotels, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NNN REIT	1	8	1	0	2.00
Sotherly Hotels	1	1	0	0	1.50

NNN REIT presently has a consensus price target of $43.78, indicating a potential upside of 7.72%. Given NNN REIT’s stronger consensus rating and higher probable upside, analysts clearly believe NNN REIT is more favorable than Sotherly Hotels.

Volatility and Risk

NNN REIT has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Sotherly Hotels has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500.

Valuation & Earnings

This table compares NNN REIT and Sotherly Hotels”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NNN REIT	$869.27 million	8.88	$396.83 million	$2.08	19.54
Sotherly Hotels	$181.89 million	0.25	$1.30 million	($0.42)	-5.21

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

Summary

NNN REIT beats Sotherly Hotels on 13 of the 14 factors compared between the two stocks.

About NNN REIT

NNN REIT invests primarily in high-quality retail properties subject generally to long-term, net leases. As of December 31, 2023, the company owned 3,532 properties in 49 states with a gross leasable area of approximately 36.0 million square feet and a weighted average remaining lease term of 10.1 years. NNN is one of only three publicly traded REITs to have increased annual dividends for 34 or more consecutive years.

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.