DRH or SHO: Which Is the Better Value Stock Right Now?

Core Viewpoint - The article compares DiamondRock Hospitality (DRH) and Sunstone Hotel Investors (SHO) to determine which stock is more attractive to value investors [1] Group 1: Zacks Rank and Earnings Outlook - DiamondRock Hospitality has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Sunstone Hotel Investors has a Zacks Rank of 3 (Hold) [3] - The Zacks Rank system emphasizes companies with positive earnings estimate revisions, suggesting that DRH is likely experiencing a more favorable earnings outlook [3][7] Group 2: Valuation Metrics - DRH has a forward P/E ratio of 7.88, significantly lower than SHO's forward P/E of 10.95, indicating that DRH may be undervalued [5] - The PEG ratio for DRH is 1.95, while SHO's PEG ratio is 2.15, suggesting that DRH has a better valuation relative to its expected earnings growth [5] - DRH's P/B ratio is 1.07 compared to SHO's P/B of 1.15, further supporting the notion that DRH is more attractively valued [6] - Based on these metrics, DRH earns a Value grade of A, while SHO receives a Value grade of C, highlighting DRH's superior valuation profile [6]