American Campus Communities (NYSE: ACC) and American Homes 4 Rent (NYSE:AMH) are both mid-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, valuation, earnings, profitability, analyst recommendations, dividends and institutional ownership.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for American Campus Communities and American Homes 4 Rent, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Campus Communities 0 4 6 0 2.60
American Homes 4 Rent 0 3 3 0 2.50

American Campus Communities presently has a consensus target price of $53.00, indicating a potential upside of 9.91%. American Homes 4 Rent has a consensus target price of $24.80, indicating a potential upside of 14.87%. Given American Homes 4 Rent’s higher possible upside, analysts clearly believe American Homes 4 Rent is more favorable than American Campus Communities.

Dividends

American Campus Communities pays an annual dividend of $1.76 per share and has a dividend yield of 3.6%. American Homes 4 Rent pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. American Campus Communities pays out 359.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Homes 4 Rent pays out -181.8% of its earnings in the form of a dividend. American Campus Communities has raised its dividend for 4 consecutive years. American Campus Communities is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares American Campus Communities and American Homes 4 Rent’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Campus Communities $772.33 million 8.52 $379.78 million $0.49 98.41
American Homes 4 Rent $934.38 million 6.02 $473.25 million ($0.11) -196.27

American Homes 4 Rent has higher revenue and earnings than American Campus Communities. American Homes 4 Rent is trading at a lower price-to-earnings ratio than American Campus Communities, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

American Campus Communities has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500. Comparatively, American Homes 4 Rent has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.

Profitability

This table compares American Campus Communities and American Homes 4 Rent’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Campus Communities 8.59% 1.90% 1.09%
American Homes 4 Rent 3.82% 0.70% 0.43%

Insider and Institutional Ownership

93.7% of American Homes 4 Rent shares are held by institutional investors. 0.7% of American Campus Communities shares are held by company insiders. Comparatively, 27.8% of American Homes 4 Rent shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

American Campus Communities beats American Homes 4 Rent on 10 of the 17 factors compared between the two stocks.

American Campus Communities Company Profile

American Campus Communities, Inc. is a self-managed and self-administered equity real estate investment trust (REIT). The Company’s segments include Wholly-Owned Properties, On-Campus Participating Properties, Development Services, and Property Management Services. It is engaged in the acquisition, design, financing, development, construction management, leasing and management of student housing properties. The Wholly-Owned Properties segment consists of off-campus properties, which are located in close proximity to the school campus. The On-Campus Participating Properties segment includes on-campus properties that are operated under long-term ground/facility leases with three university systems. The Development Services segment consists of development and construction management services that it provides through one of its taxable REIT subsidiaries for third-party owners. The Property Management Services segment includes revenues generated from third-party management contracts.

American Homes 4 Rent Company Profile

American Homes 4 Rent is an internally managed real estate investment trust (REIT) focused on acquiring, renovating, leasing and operating single-family homes as rental properties. The Company’s primary objective is to generate attractive risk-adjusted returns for its shareholders through dividends and capital appreciation by acquiring, renovating, leasing and operating single-family homes as rental properties. As of December 31, 2016, it owned 48,422 single-family properties in 22 states, including 1,119 properties held for sale, and had an additional 47 properties in escrow that it intended to acquire. Its integrated operating platform offers property management, acquisitions, construction, marketing, leasing, financial and administrative functions. The Company may seek to invest in condominium units, townhouses and real estate-related debt investments. The Company is externally managed and advised by American Homes 4 Rent Advisor, LLC (the Advisor).

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