Hannon Armstrong Sustainable Infrastructure Capital (NYSE: HASI) and Federal Realty Investment Trust (NYSE:FRT) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, dividends, earnings, profitabiliy, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares Hannon Armstrong Sustainable Infrastructure Capital and Federal Realty Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hannon Armstrong Sustainable Infrastructure Capital 25.43% 8.28% 2.68%
Federal Realty Investment Trust 28.27% 10.89% 4.13%

Institutional & Insider Ownership

70.7% of Hannon Armstrong Sustainable Infrastructure Capital shares are owned by institutional investors. Comparatively, 92.4% of Federal Realty Investment Trust shares are owned by institutional investors. 7.2% of Hannon Armstrong Sustainable Infrastructure Capital shares are owned by company insiders. Comparatively, 1.1% of Federal Realty Investment Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Hannon Armstrong Sustainable Infrastructure Capital pays an annual dividend of $1.32 per share and has a dividend yield of 5.8%. Federal Realty Investment Trust pays an annual dividend of $3.92 per share and has a dividend yield of 3.1%. Hannon Armstrong Sustainable Infrastructure Capital pays out 330.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federal Realty Investment Trust pays out 123.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hannon Armstrong Sustainable Infrastructure Capital has raised its dividend for 3 consecutive years and Federal Realty Investment Trust has raised its dividend for 49 consecutive years.

Earnings & Valuation

This table compares Hannon Armstrong Sustainable Infrastructure Capital and Federal Realty Investment Trust’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hannon Armstrong Sustainable Infrastructure Capital $36.77 million 31.18 $20.11 million $0.40 57.00
Federal Realty Investment Trust $810.65 million 11.25 $520.19 million $3.18 39.71

Federal Realty Investment Trust has higher revenue and earnings than Hannon Armstrong Sustainable Infrastructure Capital. Federal Realty Investment Trust is trading at a lower price-to-earnings ratio than Hannon Armstrong Sustainable Infrastructure Capital, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Hannon Armstrong Sustainable Infrastructure Capital and Federal Realty Investment Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hannon Armstrong Sustainable Infrastructure Capital 0 0 8 0 3.00
Federal Realty Investment Trust 1 5 6 0 2.42

Hannon Armstrong Sustainable Infrastructure Capital currently has a consensus price target of $25.57, suggesting a potential upside of 12.16%. Federal Realty Investment Trust has a consensus price target of $159.63, suggesting a potential upside of 26.41%. Given Federal Realty Investment Trust’s higher probable upside, analysts plainly believe Federal Realty Investment Trust is more favorable than Hannon Armstrong Sustainable Infrastructure Capital.

Volatility and Risk

Hannon Armstrong Sustainable Infrastructure Capital has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, Federal Realty Investment Trust has a beta of 0.28, suggesting that its stock price is 72% less volatile than the S&P 500.

Summary

Federal Realty Investment Trust beats Hannon Armstrong Sustainable Infrastructure Capital on 10 of the 17 factors compared between the two stocks.

About Hannon Armstrong Sustainable Infrastructure Capital

Hannon Armstrong Sustainable Infrastructure Capital, Inc. makes debt and equity investments in sustainable infrastructure, including energy efficiency and renewable energy. The Company focuses on providing preferred or senior level capital to sponsors and obligors for assets that generate long-term, recurring and predictable cash flows. The Company focuses its investment activities primarily on Energy Efficiency Projects, which include projects typically undertaken by energy service companies, which reduce a building’s or facility’s energy usage or cost by installing various building components, including heating, ventilation and air conditioning systems, lighting, energy controls, roofs, windows, building shells, and/or combined heat and power systems, and Renewable Energy Projects, which include projects that deploy cleaner energy sources, such as solar and wind to generate power production. It may also invest in other projects, such as water or communications infrastructure.

About Federal Realty Investment Trust

Federal Realty Investment Trust is an equity real estate investment trust (REIT). The Company specializes in the ownership, management and redevelopment of retail and mixed-use properties located primarily in affluent communities in selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, as well as in California and South Florida. As of December 31, 2016, the Company owned or had an interest in community and neighborhood shopping centers and mixed-use properties, which operated as 96 retail real estate projects and included approximately 22.6 million square feet. As of December 31, 2016, its 96 retail shopping center and mixed-use properties were located in 12 states and the District of Columbia. As of December 31, 2016, there were approximately 2,900 leases with tenants providing a range of retail products and services. These tenants range from sole proprietorships to national retailers, or corporate group of tenants.

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