MeritValue

Sunstone Hotel Investors, Inc.

SHOdata completeness 100%17 fiscal years on file
The thesis, from the filings

Sunstone Hotel Investors, Inc. earns about 4% on invested capital, below its ~9% cost of capital, and has bought back 10% of its shares over 5 years — no moat visible in the numbers. The estimate methods put fair value between $2.31 and $3.64 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$509.2M1$912.1M2$986.5M3$905.8M3$960.1M3
Net income$33M4$90.8M5$206.7M6$43.3M6$24.6M6
Operating cash flow$28.4M7$209.4M8$198.1M9$170.4M9$181.8M9
Capital expenditure$63.7M10$128.6M11$110.1M12$157.4M12$103M12
Free cash flow (derived)−$35.3M7$80.8M8$88M9$13M9$78.7M9
Total debt$1.22B13$1.63B13$814.6M14$841M15$918.1M15
Cash & equivalents$120.5M16$101.2M17$426.4M18$107.2M18$109.2M18
Diluted shares216.3M212.7M205.9M202.6M194.3M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$100.08
your share of equity
Profit it earned you last year
$1.26
Free cash flow it threw off
$4.05
Debt you’d be carrying
$47.25

10 shares is a claim on $100.08 of net worth that earned you $1.26 and generated $4.05 of cash last year, against $47.25 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
4% avg · 5y
FY21 2%FY22 3%FY23 10%FY24 1%FY25 1%

It earned about 4% on invested capital against a ~9% cost of capital — below the cost of funding. The numbers show no moat.

seeing a moat in the numbers →
Management signal · capital allocation
−10% shares · 5y

Share count is down 10% over 5 years — management has been buying back stock, quietly handing owners a bigger slice. Total debt has fallen 25% — deleveraging.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 3 estimate methods that apply put fair value between $2.31 and $3.64 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$3.64
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth5.0%
  • fcfBase$78.7M
DCF · Growth Exit 5Y
$3.03
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth5.0%
  • fcfBase$78.7M
Earnings Power Value
$2.31
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$43.3M
  • growthAssumed0.0%
Graham Number
$3
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years5.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $3.03
The three cases
Bear0.0%$1.62
Base5.0%$3.03
Bull10.0%$4.7

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 5.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001558370-24-001615 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0001558370-25-001297 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001104659-26-021440 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0001558370-24-001615 (ProfitLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001558370-25-001297 (ProfitLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001104659-26-021440 (ProfitLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001558370-24-001615 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001558370-25-001297 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001104659-26-021440 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0001558370-24-001615 (PaymentsForCapitalImprovements)
  11. 10-K · period ending 2022-12-31 · accession 0001558370-25-001297 (PaymentsForCapitalImprovements)
  12. 10-K · period ending 2023-12-31 · accession 0001104659-26-021440 (PaymentsForCapitalImprovements)
  13. 10-K · period ending 2021-12-31 · accession 0001558370-23-001869 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2023-12-31 · accession 0001558370-25-001297 (LongTermDebt)
  15. 10-K · period ending 2024-12-31 · accession 0001104659-26-021440 (LongTermDebt)
  16. 10-K · period ending 2021-12-31 · accession 0001558370-24-001615 (CashAndCashEquivalentsAtCarryingValue)
  17. 10-K · period ending 2022-12-31 · accession 0001558370-25-001297 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2023-12-31 · accession 0001104659-26-021440 (CashAndCashEquivalentsAtCarryingValue)