Critical Survey: American Homes 4 Rent (AMH) versus Colony Starwood Homes (SFR)
American Homes 4 Rent (NYSE: AMH) and Colony Starwood Homes (NYSE:SFR) are both mid-cap financials companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, analyst recommendations, dividends, institutional ownership and profitability.
This table compares American Homes 4 Rent and Colony Starwood Homes’ 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%|
|Colony Starwood Homes||-7.41%||-1.07%||-0.47%|
American Homes 4 Rent pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Colony Starwood Homes pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. 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. Colony Starwood Homes pays out -314.3% of its earnings in the form of a dividend. Colony Starwood Homes is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation & Earnings
This table compares American Homes 4 Rent and Colony Starwood Homes’ 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||7.18||$6.69 million||$0.01||2,201.00|
|Colony Starwood Homes||$575.68 million||8.28||-$81.26 million||($0.28)||-132.61|
American Homes 4 Rent has higher revenue and earnings than Colony Starwood Homes. Colony Starwood Homes is trading at a lower price-to-earnings ratio than American Homes 4 Rent, indicating that it is currently the more affordable of the two stocks.
Volatility & 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, Colony Starwood Homes has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.
Insider & Institutional Ownership
88.2% of American Homes 4 Rent shares are held by institutional investors. 27.8% of American Homes 4 Rent shares are held by company insiders. Comparatively, 5.0% of Colony Starwood Homes shares are held 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.
This is a breakdown of current ratings and target prices for American Homes 4 Rent and Colony Starwood Homes, 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|
|Colony Starwood Homes||0||4||6||0||2.60|
American Homes 4 Rent presently has a consensus price target of $25.13, suggesting a potential upside of 14.15%. Colony Starwood Homes has a consensus price target of $37.50, suggesting a potential upside of 1.00%. Given American Homes 4 Rent’s stronger consensus rating and higher possible upside, analysts clearly believe American Homes 4 Rent is more favorable than Colony Starwood Homes.
American Homes 4 Rent beats Colony Starwood Homes 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).
Colony Starwood Homes Company Profile
Starwood Waypoint Homes, formerly Colony Starwood Homes, is an internally managed real estate investment trust (REIT). The Company was formed primarily to acquire, renovate, lease and manage residential assets in select markets across the United States. It is focused on acquiring single-family rental (SFR) homes through a variety of channels, renovating these homes to the extent necessary and leasing them to qualified residents. The Company operates through two segments, which are represented by its portfolio of SFR homes and its portfolio of NPLs owned in the joint venture with Prime Asset Fund VI, LLC (Prime). The Company identifies and pursues individual home acquisition opportunities through various sources, including multiple listing services (MLS) listings, foreclosure auctions and short sales. As of December 31, 2016, its SFR portfolio consisted of 31,684 owned homes, including 31,065 rental homes and 619 homes that it does not intend to hold for the long term.
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