Is Pebblebrook Hotel Trust overvalued or undervalued?

As of 26 February 2025, the valuation grade for Pebblebrook Hotel Trust has moved from fair to risky, indicating a shift in perception regarding its investment potential. The company appears to be overvalued, particularly given its low Price to Book Value of 0.43 and an EV to EBITDA ratio of 3.03, which suggests that the market may not be accurately reflecting its underlying value. Additionally, the high Dividend Yield of 31.80% may attract income-focused investors, but it also raises concerns about sustainability given the company's negative ROE of -0.36%.
In comparison to its peers, Pebblebrook's valuation stands out unfavorably; for instance, CareTrust REIT, Inc. has a P/E ratio of 35.16 and an EV to EBITDA of 23.85, indicating a much stronger market position. Similarly, Douglas Emmett, Inc. shows a P/E of 92.69 and an EV to EBITDA of 5.46, further highlighting Pebblebrook's relative weakness. Over the past year, Pebblebrook has underperformed against the S&P 500, with a return of -9.08% compared to the index's 17.14%, reinforcing concerns about its current valuation.