Analyzing Retail Properties of America (RPAI) and Macerich (MAC)

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

Valuation and Earnings

This table compares Retail Properties of America and Macerich’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Retail Properties of America $583.14 million 5.10 $166.81 million $0.64 20.47
Macerich $1.04 billion 8.68 $516.99 million $1.05 61.16

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

Volatility & Risk

Retail Properties of America has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500. Comparatively, Macerich has a beta of 0.8, suggesting that its stock price is 20% 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 5.0%. Macerich pays an annual dividend of $2.96 per share and has a dividend yield of 4.6%. Retail Properties of America pays out 103.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Macerich pays out 281.9% 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 has raised its dividend for 6 consecutive years. Retail Properties of America is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Retail Properties of America 27.51% 6.47% 3.46%
Macerich 14.92% 3.56% 1.55%

Insider and Institutional Ownership

79.1% of Retail Properties of America shares are owned by institutional investors. Comparatively, 98.0% of Macerich shares are owned by institutional investors. 0.4% of Retail Properties of America shares are owned by company insiders. Comparatively, 3.8% of Macerich shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Retail Properties of America and Macerich, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Retail Properties of America 0 3 4 0 2.57
Macerich 1 8 5 0 2.29

Retail Properties of America currently has a consensus price target of $16.14, indicating a potential upside of 23.23%. Macerich has a consensus price target of $66.71, indicating a potential upside of 3.88%. Given Retail Properties of America’s stronger consensus rating and higher possible upside, analysts clearly believe Retail Properties of America is more favorable than Macerich.

Summary

Macerich beats Retail Properties of America on 9 of the 17 factors compared between the two stocks.

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.

Macerich Company Profile

The Macerich Company is a self-administered and self-managed real estate investment trust (REIT). The Company is involved in the acquisition, ownership, development, redevelopment, management and leasing of regional and community/power shopping centers located throughout the United States. The Company owns ownership interests in, The Macerich Partnership, L.P. (the Operating Partnership). As of December 31, 2016, the Company, through its operating partnership, had ownership interests in 50 regional shopping centers and seven community/power shopping centers. These 57 regional and community/power shopping centers consisted of approximately 56 million square feet of gross leasable area (GLA), as of December 31, 2016. The Company’s properties include Danbury Fair Mall, Desert Sky Mall, Fresno Fashion Fair, NorthPark Mall, Oaks, The, Towne Mall, Valley Mall, Arrowhead Towne Center, Deptford Mall and South Plains Mall.

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