Upscale hotel landlord Ashford Hospitality Trust (NYSE:AHT) stock is one of those companies that’s either loved or hated.
Among active traders, it feels like there’s no “in between” when it comes to AHT stock.
Just by looking at the company’s portfolio, a casual observer probably wouldn’t understand what’s so controversial about Ashford.
After all, the company controls dozens of fancy hotels, and the current real estate market is red-hot.
Therefore, Ashford Hospitality Trust should be making money hand over fist, right? Well, it’s not as simple as that.
The company admitted in its second-quarter 2021 news release that, “At the end of the quarter, approximately 98% of the Company’s hotels were in cash traps under
their respective loans.”
Yet, InvestorPlace contributor Alex Sirois suggested that AHT stock could be a gold mine for optimistic investors.
With that, I’ll try to present a balanced picture of Ashford Hospitality Trust: from crazy memes to real-estate dreams, there’s always something to talk about here.
A Closer Look at AHT Stock
Among other things, 2021 will be recorded in history as a time when the meme stock phenomenon took hold.
Driven by Reddit users and other social-media rebels, a selection of beaten-down stocks unexpectedly surged to short-term highs.
I can’t prove or disprove this, but I strongly suspect that Reddit traders helped push AHT stock to its 52-week high of $77.90 in June. Prior to that, the stock had been trading at around $25 or $30.
As July came to a close, however, the share price had tumbled to $16 and change. The stock trades today at around $14.75.
Easy come, easy go, as they say. Meanwhile, Ashford Hospitality Trust had trailing 12-month earnings per share of -$51.89.
Obviously, it’s problematic when the historical EPS is -$52 and the share price is $15. But hey, at least it’s now possible to own AHT stock at a reduced price point.
What’s the Good News?
With the Ashford share price near its short-term lows, I’d like to offer up some encouraging news for loyal investors.
For one thing, you never know when the Reddit crowd might decide to pump up the stock (again).
I wouldn’t say that waiting around for that to happen is a viable investment strategy. Still, it’s nice to consider the possibility of a short squeeze.
Sirois brought two other bullish points to my attention. First, during 2021’s second quarter, Ashford narrowed its net loss year-over-year from $242 million to $65.26 million.
It’s not perfection, but it’s progress. Sirois also pointed out that Ashford reduced its net loss from $344 million during the first six months of 2020, to $170.6 million during 2021’s first half.
Better Than You Might Expect
Along with the points that Sirois made, I’d like to relay a few more.
In the company’s second-quarter 2021 conference call, President and CEO Rob Hays mentioned that Ashford Hospitality Trust ended the quarter with over $520 million in cash and cash equivalents.
That’s a better capital position than some folks might have expected.
In an operating performance update from August, the company cited a surprisingly positive data point.
Specifically, Ashford’s comparable hotel EBITDA for the month of July was $26.4 million, a 27% increase over the June result.
Hays didn’t hesitate to draw attention to the improvement.
“Our Hotel EBITDA performance for July exceeded our own internal estimates,” he asserted.
As a follow-up, the CEO suggested that the AHT stock price doesn’t comport with what his company is really worth.
“Additionally, we continue to see our stock trade at a significant discount to our cash value per share and do not believe this reflects the intrinsic value of our high-quality portfolio,” Hays declared.
The Bottom Line on AHT Stock
There’s no denying it: investing in Ashford Hospitality Trust is a risky proposition.
Yet, with high risk can come great rewards. Besides, there’s good news to be found regarding Ashford, if you look hard enough.
Just please don’t over-leverage yourself on AHT stock. This is an investment that could double or triple, or lose value very quickly.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
