# Sunstone Hotel Investors (SHO.US)

Canonical: https://gigainvestors.com/s/SHO

Analysis as of: 2026-10-16T07:31:53.693Z. Financial observations: FY2001–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: $11.87 per share; close as of 2026-10-15.

Estimated value: low $1.70 per share, central $1.88 per share, high $2.12 per share. Buy at or below the central value $1.88 per share. Valuation as of 2026-10-16T07:31:53.693Z; scenarios are not confidence intervals.

Expected annual return: 3.9% at the stated quote. About 3.9% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: fail

- 4 revenue declines in the last 10 years (informational)

- negative average operating margin

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 4

- Years with a net loss: 1

- Operating margin variation: 54.28×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.12×

- FY2018: 0.26×

- FY2019: 0.16×

- FY2020: -0.91×

- FY2021: -0.17×

- FY2022: 0.11×

- FY2023: 0.12×

- FY2024: 0.09×

- FY2025: 0.08×

- LTM to Jun 2026: 0.09×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- Recent gross margin fell 44.0pp below the typical margin (limit 4pp)

- ROIC, median of available years: 4.0%

- ROIC, second-lowest year: -3.1%

- Typical minus recent gross margin: 44.0 pp

- Typical gross margin (annual median): 48.7%

- Recent gross margin (lower of latest and 3-year median): 4.7%

- Years with nonpositive capital: 0

- Capital spending / revenue: 10.9%

- ROIC including acquisitions, ten-year median: 2.9%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 5.6%

- FY2017: 4.6%

- FY2018: 10.4%

- FY2019: 6.4%

- FY2020: -7.8%

- FY2021: -3.1%

- FY2022: 3.5%

- FY2023: 4.5%

- FY2024: 2.8%

- FY2025: 2.7%

### economics: fail

- owner earnings cash conversion below threshold

- incremental invested capital return below threshold

- Owner earnings / net income, 5-yr: -0.38×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: -$151M

- Net income, five-year total: $396M

- Return on incremental invested capital: 0.0%

- Working capital / revenue, annual change: -0.3 pp

- Working capital / revenue, change between three-year averages: -1.5 pp

- Working capital / revenue, final three-year average: -1.2%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: -11.35×

- FY2022: 0.23×

- FY2023: 1.08×

- FY2024: -1.42×

- FY2025: 2.28×

### management: fail

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- potential debt-funded buybacks (informational)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 5.6% vs 2.8%

- Per-share earnings: 0.65 to 0.21 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -0.7%

- Ordinary dilution, 5-year annual growth: -2.1%

- Market cap gain: -$1.7B

- Cumulative retained earnings: -$1.4B

- Diluted shares, 10-year annual growth: -0.7%

- Diluted shares, 5-year annual growth: -2.1%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: -13.0%

- Per-share value change: -$0.44

- Per-share value, starting three-year median: $0.65

- Per-share value, ending three-year median: $0.21

- Buybacks concentrated in cheaper years (correlation): -0.41

- Average buyback yield: 3.0%

- Buyback history: 10 years

- Debt-funded buybacks: Yes

- Acquisition spending: $215M

- Cumulative net income, 10 years: $657M

- ROIC, first three-year median: 5.6%

- ROIC, last three-year median: 2.8%

Chart: Earnings per share; fiscal year observations.

- FY2016: $0.62

- FY2017: $0.65

- FY2018: $1.10

- FY2019: $0.61

- FY2020: -$1.87

- FY2021: $0.16

- FY2022: $0.41

- FY2023: $1.00

- FY2024: $0.21

- FY2025: $0.13

### accounting: pass

- Sloan accruals: -5.2%

- Receivables to sales index (DSRI): 0.93×

- Restructuring years, last five: 2

- Stock compensation / operating cash flow: 4.8%

- Earnings backed by cash: Yes

- Operating cash / earnings: 7.40×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.00×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -4.6%

- FY2017: -4.3%

- FY2018: -1.4%

- FY2019: -4.0%

- FY2020: -9.6%

- FY2021: 0.2%

- FY2022: -4.0%

- FY2023: 0.3%

- FY2024: -4.1%

- FY2025: -5.2%

## Holders

- [Christopher Davis](https://gigainvestors.com/DAV): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Price needs cash profits to grow 27.4% a year for ten years · sales +4.5%

Story as of 2026-10-16T09:59:34.743Z; price observation 2026-10-15.

Price needs cash profits to grow 27.4% a year for ten years

- 2025-08-06: Earnings call transcript: Sunstone Hotel Q2 2025 misses EPS, stock drops ([investing.com](https://www.investing.com/news/transcripts/earnings-call-transcript-sunstone-hotel-q2-2025-misses-eps-stock-drops-93CH-4174109))

- 2025-11-08: Sunstone targets mid-single-digit Q4 RevPAR growth as group bookings accelerate for 2026 ([seekingalpha.com](https://seekingalpha.com/news/4519023-sunstone-targets-mid-single-digit-q4-revpar-growth-as-group-bookings-accelerate-for-2026?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

### Sales · FY2025–2026

sales +4.5%; source https://www.sec.gov/Archives/edgar/data/1295810/000110465926021440/sho-20251231x10k.htm; observed 2026-02-27.

- FY2017: $1.2B 

- FY2018: $1.2B 

- FY2019: $1.1B 

- FY2020: $268M 

- FY2021: $509M 

- FY2022: $912M 

- FY2023: $986M 

- FY2024: $906M 

- FY2025: $960M 

- FY2026: $1.0B 

### Gross margin · FY2025

gross margin 4.7%; source https://www.sec.gov/Archives/edgar/data/1295810/000110465926021440/sho-20251231x10k.htm; observed 2026-02-27.

- FY2016: 52.9% 

- FY2017: 53.0% 

- FY2018: 52.9% 

- FY2019: 52.4% 

- FY2020: 6.1% 

- FY2021: 40.6% 

- FY2022: 49.1% 

- FY2023: 48.3% 

- FY2024: 46.6% 

- FY2025: 4.7% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in property rentals; annual sales are USD 960.1 million.

- Source: https://www.sec.gov/Archives/edgar/data/1295810/000110465926021440/sho-20251231x10k.htm (filed 2026-02-27); FY2025: revenue 960126000; grossProfit 45580000; margin = grossProfit / revenue.

### Why customers stay

Margins ranged from 4.7% to 48.3% during 2023–25; it earns 4% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2023: grossProfit / revenue = 48.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2024: grossProfit / revenue = 46.6%.

- Source: https://www.sec.gov/Archives/edgar/data/1295810/000110465926021440/sho-20251231x10k.htm (filed 2026-02-27); FY2025: grossProfit / revenue = 4.7%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); 10-year return on capital observations [[2016,0.05570719684092157],[2017,0.046165924927700504],[2018,0.10388526970753902],[2019,0.06393110272500675],[2020,-0.07805796684948696],[2021,-0.0313875641178394],[2022,0.035146526436389526],[2023,0.045145839170810005],[2024,0.02757723376400538],[2025,0.0268704982333806]]; median 0.040146182803599766. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 10 of 10 years; bought back USD 108.1 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2016: growth capex 0; upkeep 182185000; cash acquisitions 2447000; owner earnings 116071000. Growth capex plus acquisitions / owner earnings = 0.02108192399479629.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2017: growth capex 0; upkeep 115097000; cash acquisitions 173728000; owner earnings 187650000. Growth capex plus acquisitions / owner earnings = 0.925808686384226.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2018: growth capex 0; upkeep 18543000; owner earnings 277741000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2019: growth capex 0; upkeep 25000; owner earnings 281582000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2022: growth capex 38990736.608733356; upkeep 193515263.39126664; owner earnings 20108736.608733356. Growth capex / owner earnings = 1.9389948442509026.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2023: growth capex 0; upkeep 110131000; cash acquisitions 0; owner earnings 223639000. Growth capex plus acquisitions / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/1295810/000110465926021440/sho-20251231x10k.htm (filed 2026-02-27); FY2025: growth capex 0; upkeep 103046000; cash acquisitions 0; owner earnings 56030000. Growth capex plus acquisitions / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); Dividend observations: [[2016,227486000],[2017,163014000],[2018,177622000],[2019,170166000],[2020,156271000],[2021,13693000],[2022,24824000],[2023,59825000],[2024,90966000],[2025,86393000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/1295810/000110465926021440/sho-20251231x10k.htm (filed 2026-02-27); FY2025: cash repurchases 108141000 USD.

### Are managers owners

Insiders own 1.6% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15); SHO.US SharesStats.PercentInsiders = 1.559 percentage points; cache date 2026-10-15.

### What the price says

The price assumes cash profits grow 27.4% yearly over ten years; actual decline was 16.1%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); Ten-year compound average after fade. Initial solved rate 0.3887477710404067. Price 11.87; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2015 owner earnings/share 1.675492765071964 → FY2025 0.28834475802301407. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $12.56 per share

- 2016-11: $14.54 per share

- 2016-12: $15.25 per share

- 2017-01: $14.72 per share

- 2017-02: $14.75 per share

- 2017-03: $15.33 per share

- 2017-04: $14.89 per share

- 2017-05: $15.61 per share

- 2017-06: $16.12 per share

- 2017-07: $16.28 per share

- 2017-08: $15.80 per share

- 2017-09: $16.07 per share

- 2017-10: $16.32 per share

- 2017-11: $16.71 per share

- 2017-12: $16.53 per share

- 2018-01: $16.85 per share

- 2018-02: $14.43 per share

- 2018-03: $15.22 per share

- 2018-04: $15.60 per share

- 2018-05: $17.39 per share

- 2018-06: $16.62 per share

- 2018-07: $16.27 per share

- 2018-08: $16.78 per share

- 2018-09: $16.36 per share

- 2018-10: $14.47 per share

- 2018-11: $15.26 per share

- 2018-12: $13.01 per share

- 2019-01: $14.30 per share

- 2019-02: $15.05 per share

- 2019-03: $14.40 per share

- 2019-04: $14.40 per share

- 2019-05: $13.42 per share

- 2019-06: $13.71 per share

- 2019-07: $13.21 per share

- 2019-08: $13.14 per share

- 2019-09: $13.74 per share

- 2019-10: $13.51 per share

- 2019-11: $14.00 per share

- 2019-12: $13.92 per share

- 2020-01: $12.68 per share

- 2020-02: $10.95 per share

- 2020-03: $8.71 per share

- 2020-04: $9.19 per share

- 2020-05: $8.85 per share

- 2020-06: $8.15 per share

- 2020-07: $7.48 per share

- 2020-08: $8.33 per share

- 2020-09: $7.94 per share

- 2020-10: $7.42 per share

- 2020-11: $10.50 per share

- 2020-12: $11.33 per share

- 2021-01: $10.70 per share

- 2021-02: $13.21 per share

- 2021-03: $12.46 per share

- 2021-04: $13.16 per share

- 2021-05: $12.56 per share

- 2021-06: $12.42 per share

- 2021-07: $11.54 per share

- 2021-08: $11.59 per share

- 2021-09: $11.94 per share

- 2021-10: $12.34 per share

- 2021-11: $10.87 per share

- 2021-12: $11.73 per share

- 2022-01: $11.31 per share

- 2022-02: $10.58 per share

- 2022-03: $11.78 per share

- 2022-04: $12.25 per share

- 2022-05: $11.97 per share

- 2022-06: $9.92 per share

- 2022-07: $11.33 per share

- 2022-08: $10.89 per share

- 2022-09: $9.42 per share

- 2022-10: $11.15 per share

- 2022-11: $10.99 per share

- 2022-12: $9.66 per share

- 2023-01: $10.99 per share

- 2023-02: $10.57 per share

- 2023-03: $9.88 per share

- 2023-04: $9.53 per share

- 2023-05: $9.87 per share

- 2023-06: $10.12 per share

- 2023-07: $10.19 per share

- 2023-08: $8.98 per share

- 2023-09: $9.35 per share

- 2023-10: $9.30 per share

- 2023-11: $9.88 per share

- 2023-12: $10.73 per share

- 2024-01: $10.67 per share

- 2024-02: $11.19 per share

- 2024-03: $11.14 per share

- 2024-04: $10.20 per share

- 2024-05: $10.28 per share

- 2024-06: $10.46 per share

- 2024-07: $10.36 per share

- 2024-08: $10.43 per share

- 2024-09: $10.32 per share

- 2024-10: $10.09 per share

- 2024-11: $10.75 per share

- 2024-12: $11.84 per share

- 2025-01: $11.33 per share

- 2025-02: $10.48 per share

- 2025-03: $9.41 per share

- 2025-04: $8.34 per share

- 2025-05: $8.96 per share

- 2025-06: $8.68 per share

- 2025-07: $8.75 per share

- 2025-08: $9.48 per share

- 2025-09: $9.37 per share

- 2025-10: $8.85 per share

- 2025-11: $9.36 per share

- 2025-12: $8.94 per share

- 2026-01: $8.77 per share

- 2026-02: $9.28 per share

- 2026-03: $9.01 per share

- 2026-04: $9.82 per share

- 2026-05: $10.82 per share

- 2026-06: $11.45 per share

- 2026-07: $11.77 per share

- 2026-08: $11.17 per share

- 2026-09: $11.21 per share

- 2026-10: $11.87 per share

## Annual estimated value (USD per share)

- FY2016: low $5.88 per share, central $6.47 per share, high $7.25 per share

- FY2017: low $18.28 per share, central $20.51 per share, high $23.49 per share

- FY2018: low $12.23 per share, central $13.44 per share, high $15.05 per share

- FY2019: low $16.61 per share, central $18.41 per share, high $20.81 per share

- FY2020: low $3.81 per share, central $4.11 per share, high $4.50 per share

- FY2021: low $4.55 per share, central $5.11 per share, high $5.85 per share

- FY2022: low $1.42 per share, central $1.57 per share, high $1.76 per share

- FY2023: low $3.13 per share, central $3.29 per share, high $3.50 per share

- FY2025: low $1.65 per share, central $1.82 per share, high $2.04 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/1295810/000110465926021440/sho-20251231x10k.htm); period 2025-12-31, filed 2026-02-27.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.