RLJ Lodging Trust (NYSE:RLJ) versus Chatham Lodging Trust (NYSE:CLDT) Critical Review

Chatham Lodging Trust (NYSE:CLDT) and RLJ Lodging Trust (NYSE:RLJ) are both small-cap real estate companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, earnings, risk, valuation, analyst recommendations and institutional ownership.

Dividends

Chatham Lodging Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.0%. RLJ Lodging Trust pays an annual dividend of $0.60 per share and has a dividend yield of 5.3%. Chatham Lodging Trust pays out 500.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chatham Lodging Trust has increased its dividend for 2 consecutive years and RLJ Lodging Trust has increased its dividend for 3 consecutive years. RLJ Lodging Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and price targets for Chatham Lodging Trust and RLJ Lodging Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chatham Lodging Trust	0	3	2	0	2.40
RLJ Lodging Trust	3	5	2	0	1.90

Chatham Lodging Trust presently has a consensus price target of $13.00, indicating a potential downside of 2.15%. RLJ Lodging Trust has a consensus price target of $10.94, indicating a potential downside of 3.53%. Given Chatham Lodging Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Chatham Lodging Trust is more favorable than RLJ Lodging Trust.

Risk & Volatility

Chatham Lodging Trust has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, RLJ Lodging Trust has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500.

Profitability

This table compares Chatham Lodging Trust and RLJ Lodging Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chatham Lodging Trust	4.00%	1.56%	1.00%
RLJ Lodging Trust	2.00%	1.52%	0.57%

Valuation and Earnings

This table compares Chatham Lodging Trust and RLJ Lodging Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chatham Lodging Trust	$295.08 million	2.10	$15.05 million	$0.08	166.07
RLJ Lodging Trust	$1.35 billion	1.28	$28.51 million	N/A	N/A

RLJ Lodging Trust has higher revenue and earnings than Chatham Lodging Trust.

Institutional & Insider Ownership

88.4% of Chatham Lodging Trust shares are owned by institutional investors. Comparatively, 92.3% of RLJ Lodging Trust shares are owned by institutional investors. 8.1% of Chatham Lodging Trust shares are owned by insiders. Comparatively, 3.7% of RLJ Lodging Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Chatham Lodging Trust beats RLJ Lodging Trust on 8 of the 15 factors compared between the two stocks.

About Chatham Lodging Trust

Chatham Lodging Trust is a self-advised, publicly traded real estate investment trust (REIT) focused primarily on investing in upscale, extended-stay hotels and premium-branded, select-service hotels. The company owns 39 hotels totaling 5,915 rooms/suites in 16 states and the District of Columbia.

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.