DiamondRock Hospitality (DRH) & KKR Real Estate Finance Trust (KREF) Critical Comparison

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DiamondRock Hospitality (NYSE:DRH) and KKR Real Estate Finance Trust (NYSE:KREF) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Insider & Institutional Ownership

72.2% of KKR Real Estate Finance Trust shares are owned by institutional investors. 1.1% of DiamondRock Hospitality shares are owned by company insiders. Comparatively, 0.9% of KKR Real Estate Finance Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for DiamondRock Hospitality and KKR Real Estate Finance Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DiamondRock Hospitality 2 2 4 0 2.25
KKR Real Estate Finance Trust 0 1 3 0 2.75

DiamondRock Hospitality presently has a consensus price target of $12.04, suggesting a potential upside of 12.75%. KKR Real Estate Finance Trust has a consensus price target of $21.00, suggesting a potential upside of 7.64%. Given DiamondRock Hospitality’s higher possible upside, research analysts plainly believe DiamondRock Hospitality is more favorable than KKR Real Estate Finance Trust.

Dividends

DiamondRock Hospitality pays an annual dividend of $0.50 per share and has a dividend yield of 4.7%. KKR Real Estate Finance Trust pays an annual dividend of $1.72 per share and has a dividend yield of 8.8%. DiamondRock Hospitality pays out 50.0% of its earnings in the form of a dividend. KKR Real Estate Finance Trust pays out 141.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk & Volatility

DiamondRock Hospitality has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500. Comparatively, KKR Real Estate Finance Trust has a beta of -0.15, suggesting that its stock price is 115% less volatile than the S&P 500.

Valuation and Earnings

This table compares DiamondRock Hospitality and KKR Real Estate Finance Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
DiamondRock Hospitality $870.01 million 2.55 $91.87 million $1.00 10.68
KKR Real Estate Finance Trust $83.14 million 12.44 $59.06 million $1.22 15.99

DiamondRock Hospitality has higher revenue and earnings than KKR Real Estate Finance Trust. DiamondRock Hospitality is trading at a lower price-to-earnings ratio than KKR Real Estate Finance Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares DiamondRock Hospitality and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DiamondRock Hospitality 9.26% 4.26% 2.53%
KKR Real Estate Finance Trust 65.77% 8.53% 1.37%

DiamondRock Hospitality Company Profile

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations. The Company owns 30 premium quality hotels with over 9,900 rooms. The Company has strategically positioned its hotels to be operated both under leading global brand families such as Hilton and Marriott as well as unique boutique hotels in the lifestyle segment.

KKR Real Estate Finance Trust Company Profile

KKR Real Estate Finance Trust Inc., a real estate finance company, focuses primarily on originating and acquiring senior loans secured by commercial real estate assets. The company engages in the origination and purchase of credit investments related to commercial real estate, including leveraged and unleveraged commercial mortgage loans, and commercial mortgage-backed securities. It has elected to be taxed as a real estate investment trust and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2014 and is headquartered in New York, New York.

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