Critical Review: Macerich (MAC) & Agree Realty (ADC)
Macerich (NYSE: MAC) and Agree Realty (NYSE:ADC) are both financials companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, institutional ownership, valuation, analyst recommendations and risk.
Institutional and Insider Ownership
98.0% of Macerich shares are owned by institutional investors. Comparatively, 87.0% of Agree Realty shares are owned by institutional investors. 3.8% of Macerich shares are owned by company insiders. Comparatively, 4.4% of Agree Realty shares are owned 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.
This is a summary of recent ratings and recommmendations for Macerich and Agree Realty, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Macerich currently has a consensus target price of $66.71, suggesting a potential upside of 3.88%. Agree Realty has a consensus target price of $52.50, suggesting a potential upside of 6.08%. Given Agree Realty’s stronger consensus rating and higher probable upside, analysts clearly believe Agree Realty is more favorable than Macerich.
Earnings and Valuation
This table compares Macerich and Agree Realty’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Macerich||$1.04 billion||8.68||$516.99 million||$1.05||61.16|
|Agree Realty||$91.53 million||15.80||$45.11 million||$2.04||24.26|
Macerich has higher revenue and earnings than Agree Realty. Agree Realty is trading at a lower price-to-earnings ratio than Macerich, indicating that it is currently the more affordable of the two stocks.
Macerich pays an annual dividend of $2.96 per share and has a dividend yield of 4.6%. Agree Realty pays an annual dividend of $2.02 per share and has a dividend yield of 4.1%. 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. Agree Realty pays out 99.0% 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 has raised its dividend for 6 consecutive years and Agree Realty has raised its dividend for 4 consecutive years. Macerich is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Macerich and Agree Realty’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk and Volatility
Macerich has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500. Comparatively, Agree Realty has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.
Agree Realty beats Macerich on 11 of the 17 factors compared between the two stocks.
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.
About Agree Realty
Agree Realty Corporation (Agree Realty) is an integrated real estate investment trust (REIT) primarily focused on the ownership, acquisition, development and management of retail properties. The Company operates through Agree Limited Partnership (the Operating Partnership). As of December 31, 2016, its portfolio consisted of 366 properties located in 43 states and totaling approximately seven million square feet of gross leasable area (GLA). As of December 31, 2016, its portfolio included 363 net lease properties, which contributed approximately 98.1% of annualized base rent, and three community shopping centers. The Company’s business objective is to generate consistent shareholder returns by investing in and actively managing a diversified portfolio of retail properties net leased to industry tenants. Its community shopping centers include Capital Plaza, Frankfort; Central Michigan Commons, Mount Pleasant, and West Frankfort Plaza, West Frankfort.
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