Reviewing Diversified Healthcare Trust (NASDAQ:DHC) & RLJ Lodging Trust (NYSE:RLJ)

RLJ Lodging Trust (NYSE:RLJ) and Diversified Healthcare Trust (NASDAQ:DHC) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, earnings, institutional ownership and profitability.

Risk & Volatility

RLJ Lodging Trust has a beta of 1.68, indicating that its stock price is 68% more volatile than the S&P 500. Comparatively, Diversified Healthcare Trust has a beta of 2.17, indicating that its stock price is 117% more volatile than the S&P 500.

Dividends

RLJ Lodging Trust pays an annual dividend of $0.60 per share and has a dividend yield of 6.3%. Diversified Healthcare Trust pays an annual dividend of $0.04 per share and has a dividend yield of 1.5%. RLJ Lodging Trust pays out 206.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Diversified Healthcare Trust pays out -2.5% of its earnings in the form of a dividend.

Profitability

This table compares RLJ Lodging Trust and Diversified Healthcare Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RLJ Lodging Trust	5.19%	3.58%	1.44%
Diversified Healthcare Trust	-26.09%	-17.55%	-7.20%

Institutional and Insider Ownership

92.4% of RLJ Lodging Trust shares are owned by institutional investors. Comparatively, 76.0% of Diversified Healthcare Trust shares are owned by institutional investors. 2.6% of RLJ Lodging Trust shares are owned by insiders. Comparatively, 1.4% of Diversified Healthcare Trust shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for RLJ Lodging Trust and Diversified Healthcare Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RLJ Lodging Trust	2	2	3	0	2.14
Diversified Healthcare Trust	1	1	1	0	2.00

RLJ Lodging Trust currently has a consensus price target of $10.92, indicating a potential upside of 14.25%. Diversified Healthcare Trust has a consensus price target of $4.50, indicating a potential upside of 70.45%. Given Diversified Healthcare Trust’s higher probable upside, analysts clearly believe Diversified Healthcare Trust is more favorable than RLJ Lodging Trust.

Earnings & Valuation

This table compares RLJ Lodging Trust and Diversified Healthcare Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RLJ Lodging Trust	$1.33 billion	1.11	$76.40 million	$0.29	32.95
Diversified Healthcare Trust	$1.48 billion	0.43	-$293.57 million	($1.61)	-1.64

RLJ Lodging Trust has higher earnings, but lower revenue than Diversified Healthcare Trust. Diversified Healthcare Trust is trading at a lower price-to-earnings ratio than RLJ Lodging Trust, indicating that it is currently the more affordable of the two stocks.

Summary

RLJ Lodging Trust beats Diversified Healthcare Trust on 12 of the 16 factors compared between the two stocks.

About RLJ Lodging Trust

RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company's portfolio currently consists of 96 hotels with approximately 21,200 rooms, located in 23 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.

About Diversified Healthcare Trust

Diversified Healthcare Trust is a real estate investment trust, which engages in the ownership of senior living communities, medical office buildings, and wellness centers. It operates through the following segments: Office Portfolio, Senior Housing Operating Portfolio (SHOP), and Non-Segment. The Office Portfolio segment consists of medical office properties leased to medical providers and other medical related businesses, as well as life science properties leased to biotech laboratories and other similar tenants. The SHOP segment manages senior living communities that offers short term and long term residential care, and other services for residents where it pay fees to the operator to manage the communities for its account. The company was founded on December 16, 1998 and is headquartered in Newton, MA.