Critical Analysis: Seritage Growth Properties (NYSE:SRG) & RLJ Lodging Trust (NYSE:RLJ)

RLJ Lodging Trust (NYSE:RLJ) and Seritage Growth Properties (NYSE:SRG) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.

Profitability

This table compares RLJ Lodging Trust and Seritage Growth Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RLJ Lodging Trust	2.11%	1.54%	0.59%
Seritage Growth Properties	-404.37%	-20.13%	-12.10%

Earnings & Valuation

This table compares RLJ Lodging Trust and Seritage Growth Properties”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RLJ Lodging Trust	$1.35 billion	0.84	$28.51 million	$0.02	373.95
Seritage Growth Properties	$18.42 million	8.27	-$153.54 million	($1.42)	-1.91

RLJ Lodging Trust has higher revenue and earnings than Seritage Growth Properties. Seritage Growth Properties is trading at a lower price-to-earnings ratio than RLJ Lodging Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

RLJ Lodging Trust pays an annual dividend of $0.60 per share and has a dividend yield of 8.0%. Seritage Growth Properties pays an annual dividend of $1.00 per share and has a dividend yield of 37.0%. RLJ Lodging Trust pays out 3,000.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Seritage Growth Properties pays out -70.4% of its earnings in the form of a dividend. RLJ Lodging Trust has raised its dividend for 3 consecutive years. Seritage Growth Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

92.3% of RLJ Lodging Trust shares are owned by institutional investors. Comparatively, 78.9% of Seritage Growth Properties shares are owned by institutional investors. 2.6% of RLJ Lodging Trust shares are owned by insiders. Comparatively, 0.6% of Seritage Growth Properties shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

RLJ Lodging Trust has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500. Comparatively, Seritage Growth Properties has a beta of 2.43, meaning that its stock price is 143% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for RLJ Lodging Trust and Seritage Growth Properties, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RLJ Lodging Trust	3	3	2	1	2.11
Seritage Growth Properties	1	0	0	0	1.00

RLJ Lodging Trust currently has a consensus price target of $8.64, suggesting a potential upside of 15.56%. Given RLJ Lodging Trust’s stronger consensus rating and higher probable upside, research analysts plainly believe RLJ Lodging Trust is more favorable than Seritage Growth Properties.

Summary

RLJ Lodging Trust beats Seritage Growth Properties on 14 of the 18 factors compared between the two stocks.

About RLJ Lodging Trust

RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company's portfolio currently consists of 96 hotels with approximately 21,200 rooms, located in 23 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.

About Seritage Growth Properties

Seritage Growth Properties operates as a real estate investment trust. The firm engages in the acquisition, ownership, development, redevelopment, management, and leasing of retail properties throughout the United States. Its property portfolio includes mall, shopping centers and freestanding locations. The company was founded on June 3, 2015 and is headquartered in New York, NY.