Silver Bay Realty Trust (NYSE: SBY) and AvalonBay Communities (NYSE:AVB) are both financials companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, valuation, earnings, profitability, analyst recommendations, dividends and institutional ownership.

Profitability

This table compares Silver Bay Realty Trust and AvalonBay Communities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Silver Bay Realty Trust -5.71% -1.42% -0.61%
AvalonBay Communities 41.55% 8.66% 4.94%

Insider and Institutional Ownership

73.6% of Silver Bay Realty Trust shares are held by institutional investors. Comparatively, 94.9% of AvalonBay Communities shares are held by institutional investors. 7.3% of Silver Bay Realty Trust shares are held by company insiders. Comparatively, 0.5% of AvalonBay Communities shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Silver Bay Realty Trust and AvalonBay Communities, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Silver Bay Realty Trust 0 3 0 0 2.00
AvalonBay Communities 1 8 8 0 2.41

Silver Bay Realty Trust presently has a consensus target price of $20.25, indicating a potential downside of 5.77%. AvalonBay Communities has a consensus target price of $200.00, indicating a potential upside of 18.88%. Given AvalonBay Communities’ stronger consensus rating and higher possible upside, analysts clearly believe AvalonBay Communities is more favorable than Silver Bay Realty Trust.

Dividends

Silver Bay Realty Trust pays an annual dividend of $0.52 per share and has a dividend yield of 2.4%. AvalonBay Communities pays an annual dividend of $5.68 per share and has a dividend yield of 3.4%. Silver Bay Realty Trust pays out -742.9% of its earnings in the form of a dividend. AvalonBay Communities pays out 88.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Silver Bay Realty Trust has raised its dividend for 4 consecutive years and AvalonBay Communities has raised its dividend for 6 consecutive years. AvalonBay Communities is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Silver Bay Realty Trust and AvalonBay Communities’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Silver Bay Realty Trust N/A N/A N/A ($0.07) -307.00
AvalonBay Communities $2.05 billion 11.36 $1.03 billion $6.40 26.29

AvalonBay Communities has higher revenue and earnings than Silver Bay Realty Trust. Silver Bay Realty Trust is trading at a lower price-to-earnings ratio than AvalonBay Communities, indicating that it is currently the more affordable of the two stocks.

Summary

AvalonBay Communities beats Silver Bay Realty Trust on 12 of the 14 factors compared between the two stocks.

About Silver Bay Realty Trust

Silver Bay Realty Trust Corp. is a real estate investment trust. It focuses on the acquisition, renovation, leasing and management of single-family properties in select markets in the United States. As of December 31, 2016, it had owned 9,044 single-family properties in Arizona, California, Florida, Georgia, Nevada, North Carolina, Ohio, South Carolina and Texas. Its investments in real estate consist of single-family properties located in various select markets, including Atlanta, Phoenix, Tampa, Charlotte, Orlando, Dallas, Jacksonville, Northern California, Las Vegas, Columbus, Tucson and Southeast Florida. The Charlotte market includes properties in South Carolina due to its proximity to Charlotte, North Carolina. The Northern California market consists of Contra Costa, Napa and Solano counties. The Southeast Florida market consists of Miami-Dade, Broward and Palm Beach counties. It conducts business and owns all of its properties through Silver Bay Operating Partnership L.P.

About AvalonBay Communities

AvalonBay Communities, Inc. is a real estate investment trust (REIT). The Company is focused on the development, redevelopment, acquisition, ownership and operation of multifamily communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California. Its segments include Established Communities, Other Stabilized Communities and Development/Redevelopment Communities. As of June 30, 2017, the Company owned or held a direct or indirect ownership interest in 287 apartment communities containing 83,123 apartment homes in 10 states and the District of Columbia, of which 23 communities were under development and nine communities were under redevelopment. It operates its apartment communities under three core brands: Avalon, AVA and Eaves by Avalon. Its real estate investments consist of operating apartment communities, communities in various stages of development (Development Communities) and Development Rights.

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