Colony Capital (NYSE: CLNY) and American Residential Properties (NYSE:ARPI) are both financials companies, but which is the better business? We will compare the two companies based on the strength of their profitabiliy, valuation, dividends, earnings, analyst recommendations, institutional ownership and risk.

Dividends

Colony Capital pays an annual dividend of $1.60 per share and has a dividend yield of 7.4%. American Residential Properties does not pay a dividend. Colony Capital pays out 179.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Colony Capital has increased its dividend for 7 consecutive years.

Profitability

This table compares Colony Capital and American Residential Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Colony Capital 31.43% 3.16% 2.88%
American Residential Properties -38.70% -9.17% -3.64%

Earnings and Valuation

This table compares Colony Capital and American Residential Properties’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Colony Capital N/A N/A N/A $0.89 24.18
American Residential Properties N/A N/A N/A N/A N/A

Insider and Institutional Ownership

94.1% of Colony Capital shares are owned by institutional investors. 17.7% of Colony Capital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Colony Capital and American Residential Properties, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Colony Capital 0 1 3 0 2.75
American Residential Properties 0 0 0 0 N/A

Colony Capital currently has a consensus price target of $27.00, suggesting a potential upside of 25.46%. Given Colony Capital’s higher probable upside, research analysts clearly believe Colony Capital is more favorable than American Residential Properties.

Summary

Colony Capital beats American Residential Properties on 9 of the 10 factors compared between the two stocks.

About Colony Capital

Colony Capital, Inc., formerly Colony Financial, Inc., is a global real estate and investment management company. The Company operates through five segments: Real Estate Equity, including Light industrial real estate assets and operating platform; Single-family residential rentals through an investment in Colony Starwood Homes and Other real estate equity investments; Real Estate Debt, which includes loan originations and acquisitions, and Investment Management, which includes investment management of the Company-sponsored funds and other investment vehicles. Through its global investment management business, it has over $18.8 billion of assets under management. Its business objective is to provide risk-adjusted returns to its investors through a diversified portfolio of direct and indirect real estate-related equity and real estate debt investments, and fee bearing management contracts on investment funds that it manages.

About American Residential Properties

American Residential Properties, Inc. is an internally managed real estate investment company, which is organized as a real estate investment trust. The Company acquires, owns, renovates, and manages single-family homes as rental properties. American Residential Properties OP, L.P. acts as its operating partnership. American Residential Leasing Company, LLC is a wholly owned subsidiary of its operating partnership. The Company owns 8,893 properties in Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Nevada, North Carolina, Ohio, South Carolina, Tennessee and Texas that were 81% leased, and it managed an additional 437 properties for ARP Phoenix Fund I, LP in Arizona and Nevada. In addition to its primary business, the Company has a private mortgage financing business.

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