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

Analyst Recommendations

This is a summary of recent recommendations for Retail Opportunity Investments and Retail Properties of America, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Retail Opportunity Investments 0 4 3 0 2.43
Retail Properties of America 0 3 4 0 2.57

Retail Opportunity Investments currently has a consensus price target of $22.17, suggesting a potential upside of 14.79%. Retail Properties of America has a consensus price target of $16.14, suggesting a potential upside of 25.33%. Given Retail Properties of America’s stronger consensus rating and higher probable upside, analysts plainly believe Retail Properties of America is more favorable than Retail Opportunity Investments.

Earnings and Valuation

This table compares Retail Opportunity Investments and Retail Properties of America’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Retail Opportunity Investments $237.19 million 8.93 $32.48 million $0.34 56.79
Retail Properties of America $583.14 million 5.02 $166.81 million $0.65 19.82

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

Dividends

Retail Opportunity Investments pays an annual dividend of $0.75 per share and has a dividend yield of 3.9%. Retail Properties of America pays an annual dividend of $0.66 per share and has a dividend yield of 5.1%. Retail Opportunity Investments pays out 220.6% 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 pays out 101.5% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Retail Opportunity Investments has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500. Comparatively, Retail Properties of America has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Retail Opportunity Investments 14.13% 2.86% 1.34%
Retail Properties of America 28.84% 7.61% 3.71%

Insider and Institutional Ownership

97.5% of Retail Opportunity Investments shares are held by institutional investors. Comparatively, 79.1% of Retail Properties of America shares are held by institutional investors. 2.2% of Retail Opportunity Investments shares are held by insiders. Comparatively, 0.4% of Retail Properties of America shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Retail Properties of America beats Retail Opportunity Investments on 11 of the 16 factors compared between the two stocks.

About Retail Opportunity Investments

Retail Opportunity Investments Corp. (ROIC) is a fully integrated, self-managed real estate investment trust (REIT). The Company specializes in the acquisition, ownership and management of necessity-based community and neighborhood shopping centers on the west coast of the United States, anchored by supermarkets and drugstores. Retail Opportunity Investments Partnership, LP is the operating partnership of the Company. The Operating Partnership holds substantially all the assets of the Company and directly or indirectly holds the ownership interests in the Company’s real estate ventures. The Operating Partnership conducts the operations of the Company’s business. As of December 31, 2016, the Company’s portfolio consisted of 82 properties (81 retail and one office) totaling approximately 9.4 million square feet of gross leasable area (GLA). As of December 31, 2016, the Company’s portfolio was approximately 97.6% leased.

About Retail Properties of America

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.

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