Public Storage (NYSE: PSA) and Extra Space Storage (NYSE:EXR) are both large-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitabiliy, risk, institutional ownership, earnings, analyst recommendations, valuation and dividends.

Dividends

Public Storage pays an annual dividend of $8.00 per share and has a dividend yield of 3.8%. Extra Space Storage pays an annual dividend of $3.12 per share and has a dividend yield of 3.9%. 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. Extra Space Storage pays out 108.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Public Storage has increased its dividend for 6 consecutive years and Extra Space Storage has increased its dividend for 7 consecutive years. Extra Space Storage is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Public Storage 54.13% 27.74% 14.02%
Extra Space Storage 36.40% 14.92% 5.54%

Insider and Institutional Ownership

79.6% of Public Storage shares are held by institutional investors. 14.4% of Public Storage shares are held by insiders. Comparatively, 3.7% of Extra Space Storage shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Public Storage and Extra Space Storage’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Public Storage $2.66 billion 13.73 $1.89 billion $7.04 29.84
Extra Space Storage $1.04 billion 9.70 $679.10 million $2.88 27.88

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

Analyst Recommendations

This is a summary of current ratings for Public Storage and Extra Space Storage, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Public Storage 2 8 1 0 1.91
Extra Space Storage 2 7 2 1 2.17

Public Storage presently has a consensus price target of $223.45, indicating a potential upside of 6.38%. Extra Space Storage has a consensus price target of $87.00, indicating a potential upside of 8.34%. Given Extra Space Storage’s stronger consensus rating and higher possible upside, analysts clearly believe Extra Space Storage is more favorable than Public Storage.

Risk & Volatility

Public Storage has a beta of 0.41, meaning that its share price is 59% less volatile than the S&P 500. Comparatively, Extra Space Storage has a beta of 0.35, meaning that its share price is 65% less volatile than the S&P 500.

Summary

Public Storage beats Extra Space Storage on 11 of the 18 factors compared between the two stocks.

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.

Extra Space Storage Company Profile

Extra Space Storage Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company owns, operates, manages, acquires, develops and redevelops self-storage properties located throughout the United States. The Company operates through three segments: rental operations; tenant reinsurance, and property management, acquisition and development. The Company’s rental operations activities include rental operations of stores in which it has an ownership interest. The Tenant reinsurance activities include the reinsurance of risks relating to the loss of goods stored by tenants in its stores. The Company’s property management, acquisition and development activities include managing, acquiring, developing and selling stores. The Company’s interest in its stores is held through its operating partnership, Extra Space Storage LP (the Operating Partnership). Its primary assets are general partner and limited partner interests in the Operating Partnership.

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