Analyzing DiamondRock Hospitality (NYSE:DRH) and Terreno Realty (NYSE:TRNO)

DiamondRock Hospitality (NYSE:DRH) and Terreno Realty (NYSE:TRNO) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, risk, profitability, analyst recommendations, institutional ownership and valuation.

Dividends

DiamondRock Hospitality pays an annual dividend of $0.32 per share and has a dividend yield of 3.8%. Terreno Realty pays an annual dividend of $1.96 per share and has a dividend yield of 3.3%. DiamondRock Hospitality pays out 123.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Terreno Realty pays out 77.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DiamondRock Hospitality has increased its dividend for 1 consecutive years and Terreno Realty has increased its dividend for 5 consecutive years.

Valuation and Earnings

This table compares DiamondRock Hospitality and Terreno Realty”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DiamondRock Hospitality	$1.13 billion	1.51	$48.05 million	$0.26	32.10
Terreno Realty	$382.62 million	15.81	$184.50 million	$2.52	23.24

Terreno Realty has lower revenue, but higher earnings than DiamondRock Hospitality. Terreno Realty is trading at a lower price-to-earnings ratio than DiamondRock Hospitality, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

DiamondRock Hospitality has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500. Comparatively, Terreno Realty has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.

Profitability

This table compares DiamondRock Hospitality and Terreno Realty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DiamondRock Hospitality	6.04%	4.23%	2.17%
Terreno Realty	59.56%	6.71%	5.28%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for DiamondRock Hospitality and Terreno Realty, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DiamondRock Hospitality	0	5	1	0	2.17
Terreno Realty	0	7	3	0	2.30

DiamondRock Hospitality presently has a consensus price target of $8.63, suggesting a potential upside of 3.36%. Terreno Realty has a consensus price target of $62.89, suggesting a potential upside of 7.36%. Given Terreno Realty’s stronger consensus rating and higher possible upside, analysts plainly believe Terreno Realty is more favorable than DiamondRock Hospitality.

Summary

Terreno Realty beats DiamondRock Hospitality on 11 of the 15 factors compared between the two stocks.

About DiamondRock Hospitality

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 leisure destinations and top gateway markets. The Company currently owns 36 premium quality hotels with over 9,700 rooms. The Company has strategically positioned its portfolio to be operated both under leading global brand families as well as independent boutique hotels in the lifestyle segment.

About Terreno Realty

Terreno Realty Corporation (Terreno, and together with its subsidiaries, the Company) acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C. All square feet, acres, occupancy and number of properties disclosed in these notes to the consolidated financial statements are unaudited. As of December 31, 2023, the Company owned 259 buildings aggregating approximately 16.0 million square feet, 45 improved land parcels consisting of approximately 152.4 acres, seven properties under development or redevelopment and approximately 62.7 acres of land entitled for future development. The Company is an internally managed Maryland corporation and elected to be taxed as a real estate investment trust (REIT) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the Code), commencing with its taxable year ended December 31, 2010.