Stag Industrial (NYSE: STAG) and EastGroup Properties (NYSE:EGP) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitabiliy, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Volatility and Risk

Stag Industrial has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500. Comparatively, EastGroup Properties has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500.

Valuation and Earnings

This table compares Stag Industrial and EastGroup Properties’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Stag Industrial $258.85 million 9.46 $179.68 million $0.09 306.59
EastGroup Properties $257.61 million 10.99 $158.04 million $2.64 31.77

Stag Industrial has higher revenue and earnings than EastGroup Properties. EastGroup Properties is trading at a lower price-to-earnings ratio than Stag Industrial, indicating that it is currently the more affordable of the two stocks.

Dividends

Stag Industrial pays an annual dividend of $1.40 per share and has a dividend yield of 5.1%. EastGroup Properties pays an annual dividend of $2.48 per share and has a dividend yield of 3.0%. Stag Industrial pays out 1,555.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. EastGroup Properties pays out 93.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Stag Industrial has increased its dividend for 6 consecutive years and EastGroup Properties has increased its dividend for 5 consecutive years. Stag Industrial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Stag Industrial and EastGroup Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stag Industrial 8.48% 3.21% 1.24%
EastGroup Properties 33.62% 13.70% 4.91%

Insider & Institutional Ownership

77.4% of Stag Industrial shares are held by institutional investors. Comparatively, 95.8% of EastGroup Properties shares are held by institutional investors. 2.0% of Stag Industrial shares are held by company insiders. Comparatively, 2.9% of EastGroup Properties shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Stag Industrial and EastGroup Properties, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stag Industrial 0 1 6 0 2.86
EastGroup Properties 1 8 1 0 2.00

Stag Industrial presently has a consensus target price of $26.50, suggesting a potential downside of 3.95%. EastGroup Properties has a consensus target price of $75.43, suggesting a potential downside of 10.05%. Given Stag Industrial’s stronger consensus rating and higher probable upside, analysts clearly believe Stag Industrial is more favorable than EastGroup Properties.

Summary

EastGroup Properties beats Stag Industrial on 9 of the 17 factors compared between the two stocks.

Stag Industrial Company Profile

STAG Industrial, Inc. is a real estate investment trust. The Company is focused on the acquisition, ownership, and operation of single-tenant, industrial properties across the United States. As of December 31, 2016, the Company owned 314 buildings in 37 states with approximately 60.9 million rentable square feet, consisting of 243 warehouse/distribution buildings, 54 light manufacturing buildings, 16 flex/office buildings, and one building in redevelopment. The Company owns all of its properties and conducts its business primarily through STAG Industrial Operating Partnership, L.P. (Operating Partnership). The Company invests in properties historically used for industrial, light manufacturing and commercial purposes. As of December 31, 2016, the Company’s properties were in various locations, such as Montgomery, Alabama; Rogers, Arkansas; Phoenix, Arizona; Sparks, Maryland; Camarillo, California, and Golden and Grand Junction in Colorado.

EastGroup Properties Company Profile

EastGroup Properties, Inc. is an equity real estate investment trust (REIT). The Company is focused on the development, acquisition and operation of industrial properties in various Sunbelt markets across the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina. The Company holds its properties as long-term investments but may determine to sell certain properties that no longer meet its investment criteria. The Company may provide financing in connection with such sales of property if market conditions require. In addition, the Company may provide financing to a partner or co-owner in connection with an acquisition of real estate in certain situations. The Company owned 327 industrial properties and one office building as of December 31, 2016. The Company’s properties in North Carolina include Lindbergh Business Park, Nations Ford Business Park and Airport Commerce Center in Charlotte area.

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