Sunstone Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of hotel owner Sunstone Hotel Investors (NYS: SHO) were heading to the penthouse today, as investors bid up shares as much as 11% after the company reported third-quarter results.

So what: Why are investors so excited about Sunstone's results today? For starters, the REIT's adjusted funds from operations of $0.20 were up 33% from last year and topped the $0.19 that Wall Street had been expecting. Revenue likewise topped estimates as it climbed 39% from 2010.

Other key metrics for the company also looked solid, with comparable hotel revenue per available room (RevPAR) up 8.6%, while the company's EBITDA margin expanded by 150 basis points.

Now what: It hasn't exactly been a smooth ride for the economy, and that's obviously a concern for a hotel owner like Sunstone. So it's good news for investors that management appears to be shrewdly operating the company to continue to produce solid results in a tough environment.

Looking at the year as a whole, management increased the midpoint of its expectations ever so slightly by tightening the range of adjusted FFO to a range of $0.79 to $0.84.

Want to keep up to date on Sunstone Hotel Investors?Add it to your watchlist.

At the time thisarticle was published Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferhas no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter,@KoppTheFool, or onFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.