Is Sunstone Hotel Investors, Inc. overvalued or undervalued?

As of 12 August 2025, the valuation grade for Sunstone Hotel Investors, Inc. has moved from attractive to fair. Based on the current metrics, the company appears to be overvalued. The P/E ratio stands at 50, significantly higher than its peers, with CareTrust REIT, Inc. at 35.16 and National Health Investors, Inc. at 24.77. Additionally, the EV to EBITDA ratio is 7.86, while the industry average is much lower, indicating a premium valuation.
In comparison to its peers, Sunstone's valuation metrics suggest it is not positioned favorably, especially with a return on equity (ROE) of only 1.69% and a return on capital employed (ROCE) of 3.91%. The company's recent stock performance has been underwhelming, with a year-to-date return of -16.22%, contrasting sharply with the S&P 500's gain of 12.22% over the same period. This underperformance reinforces the notion that Sunstone Hotel Investors, Inc. is currently overvalued.