Business

Is Ashford Hospitality Trust (NYSE: AHT) Going Up From Here?

Ashford Hospitality Trust (NYSE: AHT) stock rose 25% after announcing 7.54 million shares being issued for 849.4K shares of preferred stock. While investors have remained skeptical over owning AHT in the portfolio in the past, there seems to be a little respite now. Previously, there have remained potential risks of owning AHT common shares. AHT closed at $5.61 in yesterday’s trading session, up 0.18%. Its 52-week high is $18.80, while the 52-week low is $1.27. Ashford Hospitality Trust has a market capitalization of 81.53Cr. 

Will the April turbulence settle down?

Throughout April, AHT shares had remained turbulent, and the investors haven’t had the opportunity to unlock their seat belts. This happened, although there had been a gradual economic reboot. In March 2020, the company had appended its dividend just as the coronavirus pandemic hit. Then in June 2020,  Ashford Hospitality Trust once again suspended dividends on preferred stock. 

What does the new issue of shares mean?

Issuing new shares can bring down the outstanding stock value. The interest rate on high-cost preferred stock stands from 7.375% to 8.45%, as reported in the SEC filing of AHT. 

With all this going on, AHT remains on the gainers side, along with other stocks like Select Bancorp (NASDAQ: SLCT), InnSuites Hospitality Trust (NYSE: IHT), Pennsylvania Real Estate Investment Trust (NYSE: PEI), and Puhui Wealth Investment Management (NASDAQ: PHCF). 

AHT quarterly financial report

In Q1-2021, the hotel REIT posted an FFO of -$0.30, beating by $0.43. Ashford Hospitality Trust posted $115.83 million revenue, indicating -58.9% Y/Y, and misses by an amount of $4.95 million. Comparable RevPAR for AHT hotels dropped to $47.51, a 50.9% decline. Adjusted EBITDA came in at $5.2 million for Q1-2021. This is where there’s growing hope for investors. The quarter reported has been the best performer since Q1-2020 based on EBITDA. 

What to consider with AHT?

The profitability and revenues of AHT are improving gradually, and it is expected that valuation multiples might appear more appealing. There is still an overhang on AHT from uncertainty and dilution, which roots from the COVID-19 pandemic, but AHT stock is still seen as the one worth betting on. 

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