CubeSmart (NYSE: CUBE) and Public Storage (NYSE:PSA) are both mid-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their institutional ownership, earnings, profitabiliy, analyst recommendations, dividends, valuation and risk.

Institutional and Insider Ownership

81.3% of Public Storage shares are owned by institutional investors. 1.2% of CubeSmart shares are owned by company insiders. Comparatively, 14.4% of Public Storage shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares CubeSmart and Public Storage’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CubeSmart $521.28 million 8.07 $316.69 million $0.51 45.77
Public Storage $2.66 billion 13.42 $1.89 billion $7.04 29.17

Public Storage has higher revenue and earnings than CubeSmart. Public Storage is trading at a lower price-to-earnings ratio than CubeSmart, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

CubeSmart has a beta of 0.18, meaning that its share price is 82% less volatile than the S&P 500. Comparatively, Public Storage has a beta of 0.41, meaning that its share price is 59% less volatile than the S&P 500.

Dividends

CubeSmart pays an annual dividend of $1.08 per share and has a dividend yield of 4.6%. Public Storage pays an annual dividend of $8.00 per share and has a dividend yield of 3.9%. CubeSmart pays out 211.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Public Storage pays out 113.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CubeSmart has increased its dividend for 5 consecutive years and Public Storage has increased its dividend for 7 consecutive years.

Profitability

This table compares CubeSmart and Public Storage’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CubeSmart 18.53% 5.80% 2.84%
Public Storage 54.13% 27.74% 14.02%

Analyst Recommendations

This is a summary of recent ratings for CubeSmart and Public Storage, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CubeSmart 0 4 4 0 2.50
Public Storage 2 8 1 0 1.91

CubeSmart presently has a consensus target price of $30.13, indicating a potential upside of 29.07%. Public Storage has a consensus target price of $227.80, indicating a potential upside of 10.93%. Given CubeSmart’s stronger consensus rating and higher possible upside, equities analysts plainly believe CubeSmart is more favorable than Public Storage.

Summary

Public Storage beats CubeSmart on 12 of the 17 factors compared between the two stocks.

CubeSmart Company Profile

CubeSmart operates as a self-managed and self-administered real estate company. The Company focuses on the ownership, operation, management, acquisition and development of self-storage properties in the United States. Its self-storage properties are designed to offer storage space for its residential and commercial customers. Its storage facilities offer lockers, mini storage units and large 10 feet x 30 feet storage rooms. The Company offers various storage options, including household and personal storage, business storage, vehicle and car storage, recreational vehicle (RV) storage, boat storage, motorcycle storage, moving storage and military storage. It also offers CubeSmart Services. As of December 31, 2016, the Company owned 475 self-storage properties located in 23 states and in the District of Columbia. In addition, as of December 31, 2016, it had managed 316 stores for third parties. Its self-storage properties are located in metropolitan areas, as well as suburban areas.

Public Storage Company Profile

Public Storage is a real estate investment trust (REIT). The Company’s principal business activities include the ownership and operation of self-storage facilities, which offer storage spaces for lease, generally on a month-to-month basis, for personal and business use, ancillary activities, such as merchandise sales and tenant reinsurance to the tenants at its self-storage facilities, as well as the acquisition and development of additional self-storage space. The Company’s segments include Self-Storage Operations, Ancillary Operations, Investment in PS Business Parks, Inc. (PSB) and Investment in Shurgard Europe. As of December 31, 2016, the Company had direct and indirect equity interests in 2,348 self-storage facilities (with approximately 154 million net rentable square feet) located in 38 states in the United States operating under the Public Storage name.

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