Analyzing Sunstone Hotel Investors (NYSE:SHO) and Terreno Realty (NYSE:TRNO)

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Sunstone Hotel Investors and Terreno Realty, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sunstone Hotel Investors	2	3	3	0	2.13
Terreno Realty	1	6	7	1	2.53

Sunstone Hotel Investors presently has a consensus target price of $9.29, suggesting a potential downside of 1.24%. Terreno Realty has a consensus target price of $65.21, suggesting a potential upside of 9.61%. Given Terreno Realty’s stronger consensus rating and higher possible upside, analysts plainly believe Terreno Realty is more favorable than Sunstone Hotel Investors.

Earnings & Valuation

This table compares Sunstone Hotel Investors and Terreno Realty”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sunstone Hotel Investors	$905.81 million	1.97	$43.26 million	N/A	N/A
Terreno Realty	$382.62 million	16.08	$184.50 million	$3.15	18.89

Terreno Realty has lower revenue, but higher earnings than Sunstone Hotel Investors.

Insider and Institutional Ownership

99.4% of Sunstone Hotel Investors shares are owned by institutional investors. 1.1% of Sunstone Hotel Investors shares are owned by company insiders. Comparatively, 2.4% of Terreno Realty shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Sunstone Hotel Investors pays an annual dividend of $0.36 per share and has a dividend yield of 3.8%. Terreno Realty pays an annual dividend of $2.08 per share and has a dividend yield of 3.5%. Terreno Realty pays out 66.0% of its earnings in the form of a dividend. Sunstone Hotel Investors has increased its dividend for 2 consecutive years and Terreno Realty has increased its dividend for 5 consecutive years.

Volatility and Risk

Sunstone Hotel Investors has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500. Comparatively, Terreno Realty has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sunstone Hotel Investors	1.94%	1.04%	0.59%
Terreno Realty	72.41%	8.27%	6.41%

Summary

Terreno Realty beats Sunstone Hotel Investors on 13 of the 17 factors compared between the two stocks.

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.

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.