Retail Properties of America (NYSE: RPAI) and Urban Edge Properties (NYSE:UE) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Profitability

This table compares Retail Properties of America and Urban Edge Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Retail Properties of America 34.57% 9.20% 4.44%
Urban Edge Properties 27.04% 16.72% 4.87%

Institutional & Insider Ownership

79.0% of Retail Properties of America shares are owned by institutional investors. Comparatively, 87.2% of Urban Edge Properties shares are owned by institutional investors. 0.4% of Retail Properties of America shares are owned by insiders. Comparatively, 4.7% of Urban Edge Properties shares are owned by 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.

Volatility & Risk

Retail Properties of America has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500. Comparatively, Urban Edge Properties has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.

Dividends

Retail Properties of America pays an annual dividend of $0.66 per share and has a dividend yield of 4.9%. Urban Edge Properties pays an annual dividend of $0.88 per share and has a dividend yield of 3.5%. Retail Properties of America pays out 82.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Urban Edge Properties pays out 87.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Retail Properties of America is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Retail Properties of America and Urban Edge Properties’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Retail Properties of America $565.53 million 5.52 $351.03 million $0.80 16.94
Urban Edge Properties $379.02 million 7.11 $230.14 million $1.01 24.79

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Retail Properties of America and Urban Edge Properties, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Retail Properties of America 0 4 2 0 2.33
Urban Edge Properties 1 0 0 0 1.00

Retail Properties of America presently has a consensus price target of $15.90, indicating a potential upside of 17.34%. Urban Edge Properties has a consensus price target of $25.00, indicating a potential downside of 0.16%. Given Retail Properties of America’s stronger consensus rating and higher probable upside, analysts plainly believe Retail Properties of America is more favorable than Urban Edge Properties.

Retail Properties of America Company Profile

Retail Properties of America, Inc. is a real estate investment trust (REIT). The Company owns and operates shopping centers located in the United States. As of December 31, 2016, it owned 156 retail operating properties representing 25,832,000 square feet of gross leasable area (GLA). Its retail operating portfolio includes neighborhood and community centers, power centers, and lifestyle centers and multi-tenant retail-focused mixed-use properties, as well as single-user retail properties. As of December 31, 2016, it had identified 10 target markets, including Dallas, Washington, District of Columbia/Baltimore, New York, Atlanta, Seattle, Chicago, Houston, San Antonio, Phoenix and Austin. Its properties include 23rd Street Plaza, Azalea Square I, Boulevard Plaza, Brown’s Lane, Cranberry Square, Denton Crossing, Dorman Center I & II, Edgemont Town Center, Edwards Multiplex, Green’s Corner, Home Depot Plaza, Lake Mary Pointe, Lincoln Park, University Town Center and Winchester Commons.

Urban Edge Properties Company Profile

Urban Edge Properties is a real estate investment trust. The Company is focused on managing, developing, redeveloping and acquiring retail real estate in urban communities, in the New York metropolitan region. Urban Edge Properties LP (UELP or the Operating Partnership) serves as its partnership subsidiary and owns, through affiliates, all of its real estate properties and other assets. As of December 31, 2016, its portfolio consisted of 79 shopping centers, three malls and a warehouse park adjacent to one of its centers totaling 14.8 million square feet. As of December 31, 2016, it leased 19 properties under ground and/or building leases. As of December 31, 2016, it had approximately 1,200 leases. Its shopping centers and malls are located at California, Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, South Carolina, Virginia and Puerto Rico. Its shopping centers and malls include Signal Hill, Vallejo, Walnut Creek, Newington and others.

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