Pebblebrook Hotel Trust Preferred Shares Offer Superior Risk/Reward Ratio

Pebblebrook Hotel Trust owns a high-quality portfolio in urban and resort markets. Despite its enviable assets, the common stock trades at a 40-55% discount to its net asset value. The preferred shares offer a better risk/reward, providing a stable income stream with a lower risk profile.

Pebblebrook Hotel Trust (NYSE: PEB), a publicly traded real estate investment trust (REIT), is a significant player in the urban and resort hotel markets. With a portfolio of 47 hotels and resorts, totaling approximately 12,200 guest rooms, the company owns some of the most desirable properties in the United States. Despite its enviable assets, the common stock trades at a significant discount, offering investors a unique opportunity.

Financial Overview

Earnings and Valuation:
Pebblebrook Hotel Trust's earnings are expected to decrease by -4.49% in the coming year, from $1.56 to $1.49 per share [1]. The company's price-to-earnings (P/E) ratio is -49.48, indicating that its earnings are negative, making direct comparison with companies having positive earnings difficult. However, the P/B ratio of 0.57 suggests that the company could be undervalued relative to its book value.

Dividends:
Pebblebrook Hotel Trust has a dividend yield of 0.29%, placing it in the bottom 25% of dividend-paying stocks. The company's dividend payout ratio is projected to be 2.68% next year, indicating that it can sustain or increase its dividend [1].

Sustainability and ESG:
The company's overall ESG score is 6.58%, with significant positive contributions in the "Taxes", "Jobs", and "Societal infrastructure" categories. Its environmental impact score is -2.59, indicating a negative environmental impact [1].

Analyst Sentiment and Ownership

Analyst Ratings:
Analysts have given Pebblebrook Hotel Trust an average rating score of 1.86, with a consensus rating of "Reduce". The company has been the subject of only 3 research reports in the past 90 days [1].

Ownership:
Only 2.40% of the stock is held by insiders, with insiders selling more stock than they have bought in the past three months [1]. The short interest ratio ("days to cover") is 10.2, indicating bearish sentiment among investors [1].

Recent News and Events

Pebblebrook Hotel Trust has seen a significant decrease in short interest, indicating improving investor sentiment. The company has recently completed a $140 million refinancing of its Margaritaville Hollywood Beach Resort and declared a dividend of $0.01 per share for the third quarter of 2023 [1].

Conclusion

Pebblebrook Hotel Trust offers a compelling investment opportunity for patient investors seeking a stable income stream with a lower risk profile. Despite its high-quality portfolio, the common stock trades at a substantial discount to its net asset value. However, the company's negative earnings and high short interest ratio should be carefully considered before making an investment decision.

References

[1] https://www.marketbeat.com/stocks/NYSE/PEB/