MeritValue

Sotherly Hotels Inc.

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

Sotherly Hotels Inc. earns about 6% on invested capital, but has diluted owners by 30% over 5 years — worth asking whether the growth reaches owners. The applicable estimate puts fair value near $0.67 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$127.6M1$166.1M2$173.8M3$181.9M3$176.4M3
Net income−$26.2M4$32.5M5$3.94M6$1.3M6−$7.69M6
Operating cash flow$2.32M7$6.66M8$21.4M9$25.9M9$10.3M9
Capital expenditure$3.18M10$7.96M11$8.18M12$14.6M12$14.9M12
Free cash flow (derived)−$854,3387−$1.31M8$13.2M9$11.2M9−$4.59M9
Total debt$351.2M13$320.5M14$316M15$316.5M16$315.2M16
Cash & equivalents$13.2M17$21.9M18$17.1M19$7.33M19$7.01M19
Diluted shares15.5M17.8M18.8M19.4M20.2M

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
$13.96
your share of equity
Profit it earned you last year
−$3.8
Free cash flow it threw off
−$2.27
Debt you’d be carrying
$155.68

10 shares is a claim on $13.96 of net worth that earned you −$3.8 and generated −$2.27 of cash last year, against $155.68 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
6% avg · 5y
FY21 -1%FY22 15%FY23 6%FY24 6%FY25 4%

It earned an average 6% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+30% shares · 5y

Share count is up 30% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has fallen 10% — 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
DCF · Growth Exit 10Y
not applicable
negative equity value — refusing to publish per-share figure
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth5.0%
  • fcfBase$11.2M
DCF · Growth Exit 5Y
not applicable
negative equity value — refusing to publish per-share figure
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth5.0%
  • fcfBase$11.2M
Earnings Power Value
$0.67
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$1.3M
  • growthAssumed0.0%
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0000950170-24-035300 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0000950170-25-047657 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001193125-26-157013 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0000950170-24-035300 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0000950170-25-047657 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001193125-26-157013 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0000950170-24-035300 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0000950170-25-047657 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001193125-26-157013 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0000950170-24-035300 (PaymentsForCapitalImprovements)
  11. 10-K · period ending 2022-12-31 · accession 0000950170-25-047657 (PaymentsForCapitalImprovements)
  12. 10-K · period ending 2023-12-31 · accession 0001193125-26-157013 (PaymentsForCapitalImprovements)
  13. 10-K · period ending 2021-12-31 · accession 0000950170-23-008980 (LongTermDebt)
  14. 10-K · period ending 2022-12-31 · accession 0000950170-24-035300 (LongTermDebt)
  15. 10-K · period ending 2023-12-31 · accession 0000950170-25-047657 (LongTermDebt)
  16. 10-K · period ending 2024-12-31 · accession 0001193125-26-157013 (LongTermDebt)
  17. 10-K · period ending 2021-12-31 · accession 0000950170-24-035300 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2022-12-31 · accession 0000950170-25-047657 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2023-12-31 · accession 0001193125-26-157013 (CashAndCashEquivalentsAtCarryingValue)