Critical Comparison: Getty Realty (NYSE:GTY) vs. Sunstone Hotel Investors (NYSE:SHO)

Getty Realty (NYSE:GTY) and Sunstone Hotel Investors (NYSE:SHO) are both mid-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, institutional ownership, dividends, valuation, analyst recommendations, profitability and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Getty Realty	40.06%	8.76%	4.32%
Sunstone Hotel Investors	3.84%	2.27%	1.25%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Getty Realty and Sunstone Hotel Investors, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Getty Realty	0	3	4	0	2.57
Sunstone Hotel Investors	1	5	2	1	2.33

Getty Realty presently has a consensus target price of $33.60, suggesting a potential upside of 0.65%. Sunstone Hotel Investors has a consensus target price of $10.29, suggesting a potential downside of 12.35%. Given Getty Realty’s stronger consensus rating and higher possible upside, equities analysts clearly believe Getty Realty is more favorable than Sunstone Hotel Investors.

Dividends

Getty Realty pays an annual dividend of $1.94 per share and has a dividend yield of 5.8%. Sunstone Hotel Investors pays an annual dividend of $0.36 per share and has a dividend yield of 3.1%. Getty Realty pays out 127.6% 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 327.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Getty Realty has increased its dividend for 1 consecutive years and Sunstone Hotel Investors has increased its dividend for 2 consecutive years. Getty Realty is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

85.1% of Getty Realty shares are held by institutional investors. Comparatively, 99.4% of Sunstone Hotel Investors shares are held by institutional investors. 7.5% of Getty Realty shares are held by insiders. Comparatively, 1.4% of Sunstone Hotel Investors shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Getty Realty has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, Sunstone Hotel Investors has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Getty Realty	$221.73 million	9.10	$79.19 million	$1.52	21.96
Sunstone Hotel Investors	$960.13 million	2.28	$24.57 million	$0.11	106.68

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

Getty Realty beats Sunstone Hotel Investors on 12 of the 18 factors compared between the two stocks.

About Getty Realty

Getty Realty Corp. is a publicly traded, net lease REIT specializing in the acquisition, financing and development of convenience, automotive and other single tenant retail real estate. As of December 31, 2023, the Company’s portfolio included 1,093 freestanding properties located in 40 states across the United States and Washington, D.C.

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.