Preferred Apartment Communities (NYSE: APTS) and American Homes 4 Rent (NYSE:AMH) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, earnings, risk, dividends, analyst recommendations and profitability.
Earnings & Valuation
This table compares Preferred Apartment Communities and American Homes 4 Rent’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Preferred Apartment Communities||$200.12 million||3.91||-$9.53 million||($1.01)||-21.13|
|American Homes 4 Rent||$878.89 million||7.03||$6.69 million||$0.01||2,156.00|
Volatility & Risk
Preferred Apartment Communities has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500. Comparatively, American Homes 4 Rent has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.
Institutional & Insider Ownership
52.3% of Preferred Apartment Communities shares are held by institutional investors. Comparatively, 88.3% of American Homes 4 Rent shares are held by institutional investors. 3.1% of Preferred Apartment 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 endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
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||10.49%||2.78%||1.08%|
|American Homes 4 Rent||6.56%||1.15%||0.75%|
This is a summary of recent recommendations for Preferred Apartment Communities and American Homes 4 Rent, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Preferred Apartment Communities||0||2||2||0||2.50|
|American Homes 4 Rent||0||3||5||0||2.63|
Preferred Apartment Communities currently has a consensus target price of $19.75, suggesting a potential downside of 7.45%. American Homes 4 Rent has a consensus target price of $25.13, suggesting a potential upside of 16.54%. Given American Homes 4 Rent’s stronger consensus rating and higher probable upside, analysts clearly believe American Homes 4 Rent is more favorable than Preferred Apartment Communities.
Preferred Apartment Communities pays an annual dividend of $0.94 per share and has a dividend yield of 4.4%. American Homes 4 Rent pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Preferred Apartment Communities pays out -93.1% of its earnings in the form of a dividend. American Homes 4 Rent pays out 2,000.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Preferred Apartment Communities is clearly the better dividend stock, given its higher yield and lower payout ratio.
American Homes 4 Rent beats Preferred Apartment Communities on 11 of the 16 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 office buildings located in Atlanta, Georgia and Birmingham, Alabama and Texas.
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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