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RLJ Lodging Trust (RLJ) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of RLJ Lodging (RLJ - Free Report) ? Shares have been on the move with the stock up 0.4% over the past month. The stock hit a new 52-week high of $12.14 in the previous session. RLJ Lodging has gained 1.2% since the start of the year compared to the 3.3% move for the Zacks Finance sector and the -5.2% 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 November 1, 2023, RLJ Lodging reported EPS of $0.06 versus consensus estimate of $0.39.
For the current fiscal year, RLJ Lodging is expected to post earnings of $1.68 per share on $1.32 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $1.79 per share on $1.37 billion in revenues. This represents a year-over-year change of 2.42% and 3.79%, respectively.
Valuation Metrics
RLJ Lodging 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
RLJ Lodging has a Value Score of A. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 7X current fiscal year EPS estimates, which is not in-line with the peer industry average of 10.9X. On a trailing cash flow basis, the stock currently trades at 7.5X versus its peer group's average of 10.7X. Additionally, the stock has a PEG ratio of 0.82. 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, RLJ Lodging currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
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 RLJ Lodging fits the bill. Thus, it seems as though RLJ Lodging shares could still be poised for more gains ahead.
How Does RLJ Stack Up to the Competition?
Shares of RLJ 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 Pebblebrook Hotel Trust (PEB - Free Report) . PEB has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of C, and a Momentum Score of A.
Earnings were strong last quarter. Pebblebrook Hotel Trust beat our consensus estimate by 40%, and for the current fiscal year, PEB is expected to post earnings of $1.53 per share on revenue of $1.45 billion.
Shares of Pebblebrook Hotel Trust have gained 2.3% over the past month, and currently trade at a forward P/E of 10.5X and a P/CF of 11.07X.
The REIT and Equity Trust - Other industry is in the top 40% of all the industries we have in our universe, so it looks like there are some nice tailwinds for RLJ and PEB, even beyond their own solid fundamental situation.
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RLJ Lodging Trust (RLJ) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of RLJ Lodging (RLJ - Free Report) ? Shares have been on the move with the stock up 0.4% over the past month. The stock hit a new 52-week high of $12.14 in the previous session. RLJ Lodging has gained 1.2% since the start of the year compared to the 3.3% move for the Zacks Finance sector and the -5.2% 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 November 1, 2023, RLJ Lodging reported EPS of $0.06 versus consensus estimate of $0.39.
For the current fiscal year, RLJ Lodging is expected to post earnings of $1.68 per share on $1.32 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $1.79 per share on $1.37 billion in revenues. This represents a year-over-year change of 2.42% and 3.79%, respectively.
Valuation Metrics
RLJ Lodging 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
RLJ Lodging has a Value Score of A. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 7X current fiscal year EPS estimates, which is not in-line with the peer industry average of 10.9X. On a trailing cash flow basis, the stock currently trades at 7.5X versus its peer group's average of 10.7X. Additionally, the stock has a PEG ratio of 0.82. 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, RLJ Lodging currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
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 RLJ Lodging fits the bill. Thus, it seems as though RLJ Lodging shares could still be poised for more gains ahead.
How Does RLJ Stack Up to the Competition?
Shares of RLJ 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 Pebblebrook Hotel Trust (PEB - Free Report) . PEB has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of C, and a Momentum Score of A.
Earnings were strong last quarter. Pebblebrook Hotel Trust beat our consensus estimate by 40%, and for the current fiscal year, PEB is expected to post earnings of $1.53 per share on revenue of $1.45 billion.
Shares of Pebblebrook Hotel Trust have gained 2.3% over the past month, and currently trade at a forward P/E of 10.5X and a P/CF of 11.07X.
The REIT and Equity Trust - Other industry is in the top 40% of all the industries we have in our universe, so it looks like there are some nice tailwinds for RLJ and PEB, even beyond their own solid fundamental situation.