Head-To-Head Review: Sunstone Hotel Investors (NYSE:SHO) & EastGroup Properties (NYSE:EGP)

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

Risk and Volatility

EastGroup Properties has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500. Comparatively, Sunstone Hotel Investors has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
EastGroup Properties	35.68%	7.43%	4.85%
Sunstone Hotel Investors	2.56%	1.44%	0.81%

Insider and Institutional Ownership

92.1% of EastGroup Properties shares are owned by institutional investors. Comparatively, 99.4% of Sunstone Hotel Investors shares are owned by institutional investors. 1.0% of EastGroup Properties shares are owned by insiders. Comparatively, 1.1% of Sunstone Hotel Investors shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for EastGroup Properties and Sunstone Hotel Investors, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
EastGroup Properties	0	5	10	1	2.75
Sunstone Hotel Investors	3	4	3	0	2.00

EastGroup Properties currently has a consensus target price of $200.18, suggesting a potential upside of 5.19%. Sunstone Hotel Investors has a consensus target price of $9.38, suggesting a potential upside of 0.21%. Given EastGroup Properties’ stronger consensus rating and higher probable upside, research analysts clearly believe EastGroup Properties is more favorable than Sunstone Hotel Investors.

Dividends

EastGroup Properties pays an annual dividend of $6.20 per share and has a dividend yield of 3.3%. Sunstone Hotel Investors pays an annual dividend of $0.36 per share and has a dividend yield of 3.8%. EastGroup Properties pays out 127.3% 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 pays out 900.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. EastGroup Properties has raised its dividend for 4 consecutive years and Sunstone Hotel Investors has raised its dividend for 2 consecutive years.

Earnings & Valuation

This table compares EastGroup Properties and Sunstone Hotel Investors”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
EastGroup Properties	$721.34 million	14.07	$257.40 million	$4.87	39.08
Sunstone Hotel Investors	$960.13 million	1.85	$24.57 million	$0.04	233.88

EastGroup Properties has higher earnings, but lower revenue than Sunstone Hotel Investors. EastGroup Properties 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

EastGroup Properties beats Sunstone Hotel Investors on 13 of the 18 factors compared between the two stocks.

About EastGroup Properties

EastGroup Properties, Inc. (NYSE: EGP), a member of the S&P Mid-Cap 400 and Russell 1000 Indexes, is a self-administered equity real estate investment trust focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina. The Company's goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality business distribution space for location sensitive customers (primarily in the 20,000 to 100,000 square foot range). The Company's strategy for growth is based on ownership of premier distribution facilities generally clustered near major transportation features in supply-constrained submarkets. The Company's portfolio, including development projects and value-add acquisitions in lease-up and under construction, currently includes approximately 59 million square feet.

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.