RLJ Lodging Trust (RLJ) has attracted investor attention after recent share price moves, with the stock last closing at $12. This puts the real estate investment trust in focus for readers tracking hotel focused REITs.

The recent move to a $12 share price comes after a strong run, with RLJ Lodging Trust showing solid short term share price momentum and a multi year total shareholder return that has been positive but more modest.

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RLJ Lodging Trust now trades above the average analyst price target yet still screens at a sizable intrinsic discount. Where does a reasonable view of fair value actually sit after this latest move?

Most Popular Narrative: 8% Undervalued

RLJ Lodging Trust's most followed narrative puts fair value at $13, a touch above the latest $12 close, and anchors that view in specific hotel and earnings drivers.

Ongoing conversions to higher earning brand affiliations such as Marriott’s Autograph Collection and Hilton’s Tapestry Collection, often in prime, supply constrained locations, are intended to improve brand-driven demand and mix, which management targets to translate into meaningful EBITDA growth and stronger net margins.

Curious what sits behind that $13 fair value for RLJ Lodging Trust? The narrative leans heavily on patterned revenue growth, margin repair and a richer earnings multiple that is usually reserved for far faster growing sectors.

Result: Fair Value of $13 (UNDERVALUED)

However, RLJ Lodging Trust’s story could be challenged if softer urban RevPAR trends persist, or if renovation projects fail to deliver the expected revenue uplift over time.

Next Steps

This mix of optimism and concern around RLJ Lodging Trust is exactly why it pays to check the numbers yourself and move quickly to shape your own view using the 3 key rewards and 2 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.