NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, DIAMONDROCK HOSPITALITY CO underperformed against that of the industry average and is significantly less than that of the S&P 500.
- DIAMONDROCK HOSPITALITY CO has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DIAMONDROCK HOSPITALITY CO continued to lose money by earning -$0.07 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.04 versus -$0.07).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The debt-to-equity ratio is somewhat low, currently at 0.68, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- DRH's revenue growth has slightly outpaced the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 12.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
DiamondRock Hospitality Company, a lodging focused real estate company, owns and operates premium hotels and resorts in North America. Its properties are located in New York City, Los Angeles, Chicago, Boston, and Atlanta; and in destination resort locations, such as the U.S. Diamondrock has a market cap of $1.8 billion and is part of the
industry. Shares are down 14.8% year to date as of the close of trading on Tuesday.
You can view the full
or get investment ideas from our