Critical Analysis: Preferred Apartment Communities (APTS) and American Homes 4 Rent (AMH)
Preferred Apartment Communities (NASDAQ: APTS) and American Homes 4 Rent (NYSE:AMH) are both financials companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.
Earnings and Valuation
This table compares Preferred Apartment Communities and American Homes 4 Rent’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Preferred Apartment Communities||$249.98 million||2.56||$142.18 million||N/A||N/A|
|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 Preferred Apartment Communities.
This table compares Preferred Apartment Communities and American Homes 4 Rent’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Preferred Apartment Communities||4.66%||-4.73%||0.51%|
|American Homes 4 Rent||3.82%||0.70%||0.43%|
American Homes 4 Rent pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Preferred Apartment Communities does not pay a dividend. American Homes 4 Rent pays out -181.8% of its earnings in the form of a dividend.
Institutional and Insider Ownership
93.7% of American Homes 4 Rent shares are held by institutional investors. 27.8% of American Homes 4 Rent shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This is a breakdown of current ratings and price targets for Preferred Apartment Communities and American Homes 4 Rent, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Preferred Apartment Communities||0||1||3||0||2.75|
|American Homes 4 Rent||0||3||4||0||2.57|
Preferred Apartment Communities presently has a consensus price target of $17.63, suggesting a potential downside of 8.25%. American Homes 4 Rent has a consensus price target of $25.00, suggesting a potential upside of 15.79%. Given American Homes 4 Rent’s higher possible upside, analysts clearly believe American Homes 4 Rent is more favorable than Preferred Apartment Communities.
American Homes 4 Rent beats Preferred Apartment Communities on 10 of the 13 factors compared between the two stocks.
About Preferred Apartment Communities
Preferred Apartment Communities, Inc. is a real estate investment trust (REIT). The Company is formed to acquire and operate multifamily properties in select targeted markets throughout the United States. It operates through segments, including multifamily communities, real estate related financing, new market properties and office buildings. The multifamily communities segment consists of its portfolio of owned residential multifamily communities. The real estate related financing segment consists of the Company’s portfolio of real estate loans, bridge loans, and other instruments deployed by it to partially finance the development, construction, and prestabilization carrying costs of new multifamily communities and other real estate and real estate related assets. The new market properties segment consists of its portfolio of grocery-anchored shopping centers. The office buildings segment consists of its three office buildings located in Atlanta, Georgia and Birmingham, Alabama.
About American Homes 4 Rent
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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