DiamondRock Hospitality walks into its Q1 earnings call with options traders turning notably more bullish — a sharp pivot from where positioning sat just weeks ago.
The clearest signal heading into the print is in options. The put/call ratio has dropped to 0.87, more than 1.25 standard deviations below its 20-day average of 1.35. That's a meaningful shift toward calls. For most of April, the PCR ran above 1.6, deep into defensive territory — the move lower since April 21 marks a decisive rotation toward upside positioning ahead of the release.
That rotation aligns with a stock that has quietly recovered. DRH has gained 8.6% over the past month to $10.20, with a modest 0.6% lift on the week despite slipping 0.5% Thursday. The broader peer group has moved broadly in the same direction — RLJ added 4.7% on the week, RHP gained 3.4%, and APLE 3.9% — but DRH's month-to-date gains are the more notable story, reflecting stock-specific momentum rather than just sector drift.
Short interest adds a moderately charged layer to the setup. At 7.1% of free float, the short position is material — and it jumped 16% over the past week to roughly 14.4 million shares, after running as high as 15.8 million in late March before fading through most of April. Despite that recent weekly spike, the borrow market remains unthreatening: cost to borrow is just 0.47%, and availability is wide, with utilization at only 2.7% — well off the 52-week peak of nearly 13% hit on March 31. That prior peak has since unwound completely. Bears are present but not squeezed.
The analyst community has been quietly lifting targets in the run-up. Both Evercore ISI and Wells Fargo raised their targets to $11 within the past two weeks, maintaining neutral-leaning ratings. Morgan Stanley also nudged its target higher earlier in April. The consensus mean target is $10.90, a thin premium to the current price — suggesting the Street sees the stock fairly valued near here rather than materially discounted. Bulls point to DRH's portfolio repositioning into urban and destination markets, ongoing renovations at flagship properties, and a trading price that represents a roughly 42% discount to estimated replacement cost per key. Bears flag the lodging sector's cyclical sensitivity and downward revisions to near-term revenue projections made in recent quarters. The 90-day EPS momentum score ranks in the 90th percentile, and the company's EPS surprise history sits in the 81st percentile — both telling a story of a company that has been consistently outperforming expectations.
The Q1 call is therefore less a test of whether DRH has stabilised and more a question of whether renovation-driven revenue lifts are showing up in the numbers at a scale that justifies the stock's recent re-rating.
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