Shares of DiamondRock Hospitality (DRH) have been strong performers lately, with the stock up 2% over the past month. The stock hit a new 52-week high of $12.56 in the previous session. DiamondRock Hospitality has gained 40.1% since the start of the year compared to the 6.1% move for the Zacks Finance sector and the 16.4% return for the Zacks REIT and Equity Trust - Other industry.
What's Driving the Outperformance?
The stock has an impressive 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 April 30, 2026, DiamondRock Hospitality reported EPS of $0.07 versus consensus estimate of $0.19.
For the current fiscal year, DiamondRock Hospitality is expected to post earnings of $1.15 per share on $1.15 in revenues. This represents a 6.48% change in EPS on a 2.34% change in revenues. For the next fiscal year, the company is expected to earn $1.2 per share on $1.17 in revenues. This represents a year-over-year change of 3.89% and 2.28%, respectively.
Valuation Metrics
While DiamondRock Hospitality has moved to its 52-week high over the past few weeks, investors need to be asking, what is next for the company? 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.
DiamondRock Hospitality has a Value Score of B. The stock's Growth and Momentum Scores are D and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 10.9X current fiscal year EPS estimates, which is not in-line with the peer industry average of 13.9X. On a trailing cash flow basis, the stock currently trades at 11.8X versus its peer group's average of 13.2X. Additionally, the stock has a PEG ratio of 3.61. 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 look at the Zacks Rank for the stock, as this is even more important than the company's VGM Score. Fortunately, DiamondRock Hospitality currently has a Zacks Rank of #2 (Buy) thanks to a solid earnings estimate revision trend.
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 DiamondRock Hospitality fits the bill. Thus, it seems as though DiamondRock Hospitality shares could have potential in the weeks and months to come.
How Does DRH Stack Up to the Competition?
Shares of DRH 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 Ryman Hospitality Properties, Inc. (RHP). RHP has a Zacks Rank of #2 (Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of C.
Earnings were strong last quarter. Ryman Hospitality Properties, Inc. beat our consensus estimate by 14.29%, and for the current fiscal year, RHP is expected to post earnings of $9.03 per share on revenue of $2.78 billion.
Shares of Ryman Hospitality Properties, Inc. have gained 1.2% over the past month, and currently trade at a forward P/E of 14.03X and a P/CF of 14.96X.
The REIT and Equity Trust - Other industry is in the top 23% of all the industries we have in our universe, so it looks like there are some nice tailwinds for DRH and RHP, even beyond their own solid fundamental situation.
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DiamondRock Hospitality Company (DRH): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).