American Homes 4 Rent (NYSE: AMH) and Preferred Apartment Communities (NYSE:APTS) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, analyst recommendations, profitability, dividends and earnings.
This table compares American Homes 4 Rent and Preferred Apartment Communities’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Homes 4 Rent||6.56%||1.15%||0.75%|
|Preferred Apartment Communities||10.49%||2.78%||1.08%|
This is a summary of current recommendations and price targets for American Homes 4 Rent and Preferred Apartment Communities, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Homes 4 Rent||0||1||7||0||2.88|
|Preferred Apartment Communities||0||2||2||0||2.50|
American Homes 4 Rent currently has a consensus target price of $25.13, suggesting a potential upside of 14.83%. Preferred Apartment Communities has a consensus target price of $19.75, suggesting a potential downside of 6.49%. Given American Homes 4 Rent’s stronger consensus rating and higher possible upside, research analysts plainly believe American Homes 4 Rent is more favorable than Preferred Apartment Communities.
Valuation & Earnings
This table compares American Homes 4 Rent and Preferred Apartment Communities’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|American Homes 4 Rent||$878.89 million||7.14||$6.69 million||($0.01)||-2,188.00|
|Preferred Apartment Communities||$200.12 million||3.87||-$9.53 million||($1.01)||-20.91|
American Homes 4 Rent has higher revenue and earnings than Preferred Apartment Communities. American Homes 4 Rent is trading at a lower price-to-earnings ratio than Preferred Apartment Communities, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
American Homes 4 Rent has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500. Comparatively, Preferred Apartment Communities has a beta of 0.43, indicating that its stock price is 57% less volatile than the S&P 500.
Insider & Institutional Ownership
88.2% of American Homes 4 Rent shares are held by institutional investors. Comparatively, 52.5% of Preferred Apartment Communities shares are held by institutional investors. 27.8% of American Homes 4 Rent shares are held by company insiders. Comparatively, 3.1% of Preferred Apartment Communities 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.
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 an annual dividend of $0.94 per share and has a dividend yield of 4.5%. American Homes 4 Rent pays out -2,000.0% of its earnings in the form of a dividend. Preferred Apartment Communities pays out -93.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
American Homes 4 Rent beats Preferred Apartment Communities on 12 of the 16 factors compared between the two stocks.
American Homes 4 Rent Company Profile
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).
Preferred Apartment Communities Company Profile
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.
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