Comparing Sunstone Hotel Investors (SHO) and MGM Resorts International (MGM)

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

Earnings & Valuation

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This table compares Sunstone Hotel Investors and MGM Resorts International’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sunstone Hotel Investors $1.19 billion 3.06 $145.37 million $1.22 13.29
MGM Resorts International $10.77 billion 1.65 $1.96 billion $1.02 30.79

MGM Resorts International has higher revenue and earnings than Sunstone Hotel Investors. Sunstone Hotel Investors is trading at a lower price-to-earnings ratio than MGM Resorts International, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Sunstone Hotel Investors has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500. Comparatively, MGM Resorts International has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500.

Dividends

Sunstone Hotel Investors pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. MGM Resorts International pays an annual dividend of $0.48 per share and has a dividend yield of 1.5%. Sunstone Hotel Investors pays out 16.4% of its earnings in the form of a dividend. MGM Resorts International pays out 47.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Institutional & Insider Ownership

82.8% of MGM Resorts International shares are owned by institutional investors. 0.9% of Sunstone Hotel Investors shares are owned by company insiders. Comparatively, 0.4% of MGM Resorts International shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for Sunstone Hotel Investors and MGM Resorts International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sunstone Hotel Investors 1 6 2 0 2.11
MGM Resorts International 0 3 10 0 2.77

Sunstone Hotel Investors currently has a consensus target price of $16.50, suggesting a potential upside of 1.79%. MGM Resorts International has a consensus target price of $38.08, suggesting a potential upside of 21.23%. Given MGM Resorts International’s stronger consensus rating and higher probable upside, analysts plainly believe MGM Resorts International is more favorable than Sunstone Hotel Investors.

Profitability

This table compares Sunstone Hotel Investors and MGM Resorts International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sunstone Hotel Investors 12.53% 5.56% 3.56%
MGM Resorts International 17.88% 5.45% 2.05%

Summary

MGM Resorts International beats Sunstone Hotel Investors on 10 of the 16 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 February 12, 2018 has interests in 25 hotels comprised of 12,450 rooms. Sunstone's hotels are primarily in the urban and resort upper upscale segment and are predominantly operated under nationally recognized brands, such as Marriott, Hilton and Hyatt. For further information, please visit Sunstone's website at www.sunstonehotels.com.

About MGM Resorts International

MGM Resorts International, through its subsidiaries, owns and operates integrated casino, hotel, and entertainment resorts in the United States and China. The company operates through two segments, Domestic Resorts and MGM China. Its casino resorts offer gaming, hotel, convention, dining, entertainment, retail, and other resort amenities. Its casino operations include various slots, table games, and race and sports book wagering. The company operates 14 resorts in the United States; and MGM Macau resort and casino in China, as well as develops an integrated casino, hotel, and entertainment resort on the Cotai Strip, Macau. The company also owns and operates Shadow Creek golf course, Primm Valley Golf Club, and Fallen Oak golf course. The company serves premium gaming customers; leisure and wholesale travel customers; business travelers; and group customers, including conventions, trade associations, and small meetings. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.