Is RLJ Lodging Trust overvalued or undervalued?

As of 5 May 2025, RLJ Lodging Trust has moved from an attractive to a very attractive valuation grade. The company is currently undervalued, with a P/E ratio of 17, significantly lower than peers such as CareTrust REIT, Inc. with a P/E of 29.30 and Four Corners Property Trust, Inc. at 26.84. Additionally, RLJ's price to book value stands at 0.51, indicating that the stock is trading below its book value, while its EV to EBITDA ratio of 2.30 further supports the undervaluation thesis.
In comparison to its peers, RLJ Lodging Trust's EV to EBIT ratio of 5.05 is also favorable, especially when contrasted with CareTrust REIT, Inc. at 18.40. The company's dividend yield of 7.64% is attractive, especially in a low-interest-rate environment, and its ROCE of 8.10% suggests efficient capital use. Despite recent underperformance relative to the S&P 500, where RLJ has returned -28.50% year-to-date compared to the index's 2.44%, the valuation metrics indicate that RLJ Lodging Trust presents a compelling investment opportunity at its current price of 7.30.