Tanger Factory Outlet Centers (NYSE: SKT) and Pennsylvania Real Estate Investment Trust (NYSE:PEI) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, profitability, risk, valuation and earnings.

Risk & Volatility

Tanger Factory Outlet Centers has a beta of 0.47, meaning that its share price is 53% less volatile than the S&P 500. Comparatively, Pennsylvania Real Estate Investment Trust has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500.

Profitability

This table compares Tanger Factory Outlet Centers and Pennsylvania Real Estate Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tanger Factory Outlet Centers 29.65% 20.75% 5.66%
Pennsylvania Real Estate Investment Trust -18.13% -9.06% -2.66%

Institutional & Insider Ownership

97.1% of Tanger Factory Outlet Centers shares are held by institutional investors. Comparatively, 99.3% of Pennsylvania Real Estate Investment Trust shares are held by institutional investors. 4.8% of Tanger Factory Outlet Centers shares are held by company insiders. Comparatively, 4.4% of Pennsylvania Real Estate Investment Trust shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Tanger Factory Outlet Centers and Pennsylvania Real Estate Investment Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Tanger Factory Outlet Centers $493.28 million 4.81 $276.68 million $1.51 16.55
Pennsylvania Real Estate Investment Trust $392.34 million 1.90 $217.76 million ($1.31) -8.17

Tanger Factory Outlet Centers has higher revenue and earnings than Pennsylvania Real Estate Investment Trust. Pennsylvania Real Estate Investment Trust is trading at a lower price-to-earnings ratio than Tanger Factory Outlet Centers, indicating that it is currently the more affordable of the two stocks.

Dividends

Tanger Factory Outlet Centers pays an annual dividend of $1.37 per share and has a dividend yield of 5.5%. Pennsylvania Real Estate Investment Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.9%. Tanger Factory Outlet Centers pays out 90.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pennsylvania Real Estate Investment Trust pays out -64.1% of its earnings in the form of a dividend. Tanger Factory Outlet Centers has raised its dividend for 5 consecutive years and Pennsylvania Real Estate Investment Trust has raised its dividend for 24 consecutive years. Pennsylvania Real Estate Investment Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Tanger Factory Outlet Centers and Pennsylvania Real Estate Investment Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tanger Factory Outlet Centers 2 4 2 0 2.00
Pennsylvania Real Estate Investment Trust 1 6 0 0 1.86

Tanger Factory Outlet Centers presently has a consensus price target of $30.50, indicating a potential upside of 22.05%. Pennsylvania Real Estate Investment Trust has a consensus price target of $14.08, indicating a potential upside of 31.62%. Given Pennsylvania Real Estate Investment Trust’s higher probable upside, analysts plainly believe Pennsylvania Real Estate Investment Trust is more favorable than Tanger Factory Outlet Centers.

Summary

Tanger Factory Outlet Centers beats Pennsylvania Real Estate Investment Trust on 11 of the 17 factors compared between the two stocks.

About Tanger Factory Outlet Centers

Tanger Factory Outlet Centers, Inc. is an owner and operator of outlet centers in the United States and Canada. The Company is a fully-integrated, self-administered and self-managed real estate investment trust (REIT), which focuses on developing, acquiring, owning, operating and managing outlet shopping centers. As of December 31, 2016, its portfolio consisted of 36 outlet centers, with a total gross leasable area of approximately 12.7 million square feet, which were 98% occupied and contained over 2,600 stores representing approximately 400 store brands. Its outlet centers and other assets are held by, and all of its operations are conducted by, Tanger Properties Limited Partnership and subsidiaries (Operating Partnership). The Company owns the majority of the units of partnership interest issued by the Operating Partnership, through its subsidiaries, Tanger GP Trust and Tanger LP Trust. Tanger GP Trust controls the Operating Partnership as its sole general partner.

About Pennsylvania Real Estate Investment Trust

Pennsylvania Real Estate Investment Trust (PREIT) is a self-managed and self-administered real estate investment trust (REIT). The Company’s primary business is owning and operating retail shopping malls, which it does primarily through operating partnership, PREIT Associates, L.P. (PREIT Associates). The Company is engaged in the ownership, management, leasing, acquisition, redevelopment, development and disposition of shopping malls. The Company has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region. As of December 31, 2016, the Company owned interests in 30 retail properties, of which 26 are operating properties and four are development or redevelopment properties. As of December 31, 2016, the Company’s 26 operating properties included 22 shopping malls and four other retail properties, had a total of 21.7 million square feet and were located in nine states.

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