Independence Realty Trust (NYSE: IRT) and Preferred Apartment Communities (NYSE:APTS) are both small-cap financials companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, earnings, risk, dividends, institutional ownership, analyst recommendations and profitability.

Institutional & Insider Ownership

78.7% of Independence Realty Trust shares are held by institutional investors. Comparatively, 52.5% of Preferred Apartment Communities shares are held by institutional investors. 0.6% of Independence Realty Trust 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 hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Independence Realty Trust 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
Independence Realty Trust $153.36 million 5.57 -$9.80 million ($0.26) -39.31
Preferred Apartment Communities $200.12 million 3.79 -$9.53 million ($1.01) -20.45

Preferred Apartment Communities has higher revenue and earnings than Independence Realty Trust. Independence Realty Trust 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.

Profitability

This table compares Independence Realty Trust and Preferred Apartment Communities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Independence Realty Trust -10.91% -3.08% -1.28%
Preferred Apartment Communities 10.49% 2.78% 1.08%

Dividends

Independence Realty Trust pays an annual dividend of $0.72 per share and has a dividend yield of 7.0%. Preferred Apartment Communities pays an annual dividend of $0.94 per share and has a dividend yield of 4.6%. Independence Realty Trust pays out -276.9% 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. Independence Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Independence Realty Trust and Preferred Apartment Communities, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Independence Realty Trust 0 1 5 0 2.83
Preferred Apartment Communities 0 2 2 0 2.50

Independence Realty Trust presently has a consensus target price of $11.20, indicating a potential upside of 9.59%. Preferred Apartment Communities has a consensus target price of $19.75, indicating a potential downside of 4.36%. Given Independence Realty Trust’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Independence Realty Trust is more favorable than Preferred Apartment Communities.

Volatility and Risk

Independence Realty Trust has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500. Comparatively, Preferred Apartment Communities has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500.

Summary

Independence Realty Trust beats Preferred Apartment Communities on 9 of the 16 factors compared between the two stocks.

Independence Realty Trust Company Profile

Independence Realty Trust, Inc. is an internally-managed real estate investment trust (REIT). The Company is engaged in the business of owning, managing, operating, leasing, acquiring, developing, investing in, and disposing of real estate assets. The Company owns apartment properties in geographic non-gateway markets. As of September 26, 2017, the Company owns and operates 55 multifamily apartment properties, totaling 15,165 units. Its properties include Copper Mill, Crestmont, Heritage Trace, Runaway Bay, Berkshire Square, The Crossings, Reserve at Eagle Ridge, Windrush, Heritage Park, Raindance, Augusta, Invitational, Carrington Park, Walnut Hill, Lenoxplace, Bennington Pond, Jamestown, Meadows, Oxmoor, Bayview Club, Arbors River Oaks, Fox Trails, Bridge Pointe, The Aventine Greenville and Westmont Commons.

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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