Ashford Hospitality Trust (AHT) shares ended the last trading session 14.7% higher at $5.61. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock’s 62.5% gain over the past four weeks.
Per Ashford Hospitality’s filing as of Jun 1, the company revealed that from May 9, 2021, through May 28, it exchanged 849,440 shares of its preferred stock for newly issued 7,540,672 shares of its common stock.
Since the costs of a preferred stock are higher than a common stock, the exchange is likely to lower expenses for the company, considering the interest rates on the exchanged preferred stock ranged from 7.375% to 8.45%. Hence, despite the notion that a common share issuance results in the reduction of value of the existing shares for investors, the exchange led to bullish investor sentiments, driving the stock higher.
Price and Consensus
This hotel owner is expected to post quarterly loss of $0.31 per share in its upcoming report, which represents a year-over-year change of +97.5%. Revenues are expected to be $169.18 million, up 292.8% from the year-ago quarter.
FFO and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in FFO estimate revisions are strongly correlated with near-term stock price movements.
For Ashford Hospitality Trust, the consensus FFO estimate for the quarter has been revised 31.5% higher over the last 30 days to the current level. And a positive trend in FFO estimate revision usually translates into price appreciation. So, make sure to keep an eye on AHT going forward to see if this recent jump can turn into more strength down the road.