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On Tuesday, Truist Securities confirmed its Hold rating on Diamondrock Hospitality (NYSE:DRH), with a steady price target of $10.00, falling within the broader analyst range of $9-$12. According to InvestingPro data, the stock currently trades near its 52-week low of $7.54, suggesting potential upside to analyst targets. The firm’s analysis highlighted investor enthusiasm regarding the company’s strategy for growth in free cash flow per share and free cash flow yield.
Last week, Truist Securities organized discussions between Diamondrock Hospitality’s senior management and investors, focusing on a range of topics. These included general economic trends, reactions to the company’s recent annual shareholder letter, which was very well received, and the strategic shifts following a change in the company’s CEO.
During these meetings, Diamondrock Hospitality acknowledged experiencing some areas of softness in its business, but did not report any substantial weaknesses. Despite these challenges, the company has maintained solid performance with revenue growth of 5.12% and EBITDA of $277.62M in the last twelve months. The company also emphasized that it has a limited ability to forecast future bookings due to the small size of its portfolio and inherent limitations in visibility.
The reaffirmed Hold rating and price target reflect the current sentiment and expectations from Truist Securities based on their latest interactions and analysis of Diamondrock Hospitality’s business prospects and market position. The company currently trades at an EV/EBITDA multiple of 9.89x, suggesting relatively attractive valuation metrics compared to its peers.
In other recent news, DiamondRock Hospitality Company reported its fourth-quarter 2024 earnings, highlighting a notable discrepancy between earnings per share (EPS) and revenue results. The company posted an EPS of -0.07, falling short of the forecasted 0.06, marking a miss of 0.13 dollars. However, revenue reached 279.05 million dollars, surpassing expectations by 8.14 million dollars. Despite the EPS miss, DiamondRock demonstrated a strong year-over-year increase in Hotel Adjusted EBITDA by 16.4 percent, and Corporate Adjusted EBITDA rose by 20 percent. The company’s strategic renovations and repositioning efforts contributed to these positive financial outcomes. Analysts have noted the challenges posed by labor costs and market conditions, particularly in the Florida market. Looking ahead, DiamondRock forecasts Corporate Adjusted EBITDA between 275 million and 300 million dollars for 2025 and anticipates Adjusted Funds from Operations to range from 199 million to 224 million dollars. The company plans to focus on increasing earnings per share and strategic financial management, as noted by CEO Jeff Donnelly and CFO Briony Quinn.
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