Summit Hotel Properties, Inc. (INN) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Summit Hotel Properties (INN)? Shares have been on the move with the stock up 11.7% over the past month. The stock hit a new 52-week high of $7.22 in the previous session. Summit Hotel Properties has gained 6.3% since the start of the year compared to the 18.1% move for the Zacks Finance sector and the 6.7% return for the Zacks REIT and Equity Trust - Other industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 29, 2024, Summit Hotel Properties reported EPS of $0.23 versus consensus estimate of $0.26 while it beat the consensus revenue estimate by 1.49%.
For the current fiscal year, Summit Hotel Properties is expected to post earnings of $0.96 per share on $734.07 million in revenues. This represents a 4.35% change in EPS on a -0.28% change in revenues. For the next fiscal year, the company is expected to earn $0.95 per share on $747.23 million in revenues. This represents a year-over-year change of -0.35% and 1.79%, respectively.
Valuation Metrics
Summit Hotel Properties may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Summit Hotel Properties has a Value Score of A. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 7.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 12.4X. On a trailing cash flow basis, the stock currently trades at 5.2X versus its peer group's average of 12.4X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Summit Hotel Properties currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Summit Hotel Properties fits the bill. Thus, it seems as though Summit Hotel Properties shares could have a bit more room to run in the near term.
How Does INN Stack Up to the Competition?
Shares of INN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Clipper Realty Inc. (CLPR). CLPR has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of B.
Earnings were strong last quarter. Clipper Realty Inc. beat our consensus estimate by 70%, and for the current fiscal year, CLPR is expected to post earnings of $0.56 per share on revenue of $149.8 million.
Shares of Clipper Realty Inc. have gained 18.6% over the past month, and currently trade at a forward P/E of 10.36X and a P/CF of 3.7X.
The REIT and Equity Trust - Other industry is in the top 30% of all the industries we have in our universe, so it looks like there are some nice tailwinds for INN and CLPR, even beyond their own solid fundamental situation.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Summit Hotel Properties, Inc. (INN) : Free Stock Analysis Report
Clipper Realty Inc. (CLPR) : Free Stock Analysis Report