Sunstone Hotel Investors Earnings: Here’s Why the Stock is Up Now

Sunstone Hotel Investors Inc. (NYSE:SHO) delivered a profit and met Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are up 0.23%.

Sunstone Hotel Investors Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 14.29% to $0.3 in the quarter versus EPS of $0.35 in the year-earlier quarter.

Revenue: Decreased 1.36% to $234.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Sunstone Hotel Investors Inc. reported adjusted EPS income of $0.3 per share. By that measure, the company missed the mean analyst estimate of $0.3. It missed the average revenue estimate of $236.18 million.

Quoting Management: “Our second quarter performance was generally in-line with our expectations, as operational efficiencies offset modest top-line growth. Specifically, while our same store RevPAR grew at a moderate 2.6% year-over-year pace – primarily as a result of recently completed renovations and isolated softness in corporate group business during the second quarter – solid expense controls helped drive our Adjusted EBITDA and Adjusted FFO to the high-end of our second quarter guidance range,” said Ken Cruse, Chief Executive Officer. “Our group booking activity was strong in the second quarter, with same-store group bookings increasing more than 20% over the second quarter 2012. As a result, our current-year group pace is now the strongest it has been over the past five years, and our 2014 group pace implies continued growth. Additionally, with our major 2013 renovations now complete, we expect strong EBITDA contributions from our recently repositioned hotels. As demand for lodging builds and the profit potential of our portfolio continues to improve, we expect our RevPAR and earnings growth to accelerate.”

Key Stats (on next page)…

Revenue increased 20.76% from $194.27 million in the previous quarter. EPS increased 233.33% from $0.09 in the previous quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $0.24 to a profit $0.25. For the current year, the average estimate has moved up from a profit of $0.91 to a profit of $0.96 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at]