Critical Analysis: National Retail Properties (NNN) versus Regency Centers (REG)

National Retail Properties (NYSE: NNN) and Regency Centers (NYSE:REG) are both mid-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitability, dividends, earnings and valuation.

Valuation and Earnings

This table compares National Retail Properties and Regency Centers’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Retail Properties $533.65 million 11.49 $239.50 million $1.40 28.81
Regency Centers $614.37 million 17.66 $164.92 million $0.90 70.86

National Retail Properties has higher earnings, but lower revenue than Regency Centers. National Retail Properties is trading at a lower price-to-earnings ratio than Regency Centers, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

National Retail Properties has a beta of 0.39, indicating that its stock price is 61% less volatile than the S&P 500. Comparatively, Regency Centers has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Profitability

This table compares National Retail Properties and Regency Centers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Retail Properties 44.96% 8.47% 4.08%
Regency Centers 17.59% 2.82% 1.65%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for National Retail Properties and Regency Centers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Retail Properties 0 0 5 0 3.00
Regency Centers 0 5 3 1 2.56

National Retail Properties presently has a consensus price target of $49.00, indicating a potential upside of 21.50%. Regency Centers has a consensus price target of $70.94, indicating a potential upside of 11.25%. Given National Retail Properties’ stronger consensus rating and higher possible upside, equities analysts clearly believe National Retail Properties is more favorable than Regency Centers.

Insider & Institutional Ownership

90.6% of National Retail Properties shares are owned by institutional investors. Comparatively, 92.3% of Regency Centers shares are owned by institutional investors. 1.0% of National Retail Properties shares are owned by company insiders. Comparatively, 12.7% of Regency Centers shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

National Retail Properties pays an annual dividend of $1.90 per share and has a dividend yield of 4.7%. Regency Centers pays an annual dividend of $2.12 per share and has a dividend yield of 3.3%. National Retail Properties pays out 135.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Regency Centers pays out 235.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. National Retail Properties has raised its dividend for 4 consecutive years and Regency Centers has raised its dividend for 8 consecutive years. National Retail Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

National Retail Properties beats Regency Centers on 10 of the 18 factors compared between the two stocks.

National Retail Properties Company Profile

National Retail Properties, Inc. is a real estate investment trust (REIT). The Company acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term net leases and are primarily held for investment. As of December 31, 2016, it owned 2,535 properties with an aggregate gross leasable area of approximately 27,204,000 square feet, located in 48 states. The Company focuses on investing in a range of property and tenant types; leases, mortgages and other types of real estate interests; loans secured by personal property; loans secured by partnership or membership interests in partnerships or limited liability companies, and securities of other REITs, or other issuers, including for the purpose of exercising control over such entities. The Company owns a portfolio of freestanding retail stores across the United States. It owns approximately 2,290 stores, which are leased to over 400 tenants in approximately 40 different retail categories.

Regency Centers Company Profile

Regency Centers Corporation is a real estate investment trust (REIT). The Company is the general partner of Regency Centers, L.P. (the Operating Partnership). The Company is engaged in the ownership, management, leasing, acquisition and development of retail shopping centers through the Operating Partnership. The Company’s properties include Palm Valley Marketplace, Shops at Arizona, Amerige Heights Town Center, Clayton Valley Shopping Center, Five Points Shopping Center, French Valley Village Center, Hasley Canyon Village, Pleasant Hill Shopping Center, Snell & Branham Plaza, Applewood Shopping Center, Kent Place, Black Rock, Spring Valley Shopping Center and Pebblebrook Plaza. As of December 31, 2016, the Company owned all of the Preferred Units of the Operating Partnership and approximately 99.9% of the Units in the Operating Partnership. As of December 31, 2016, it owned direct or partial interests in 307 shopping centers.

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