DDR (NYSE: DDR) and Taubman Centers (NYSE:TCO) are both mid-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, valuation and institutional ownership.
Volatility and Risk
DDR has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Taubman Centers has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500.
This is a summary of recent ratings for DDR and Taubman Centers, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
DDR currently has a consensus target price of $11.13, suggesting a potential upside of 33.39%. Taubman Centers has a consensus target price of $63.67, suggesting a potential downside of 0.16%. Given DDR’s stronger consensus rating and higher probable upside, analysts plainly believe DDR is more favorable than Taubman Centers.
Earnings & Valuation
This table compares DDR and Taubman Centers’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|DDR||$969.51 million||3.17||$60.01 million||($0.04)||-208.50|
|Taubman Centers||$612.56 million||6.32||$132.61 million||$1.05||60.73|
Taubman Centers has lower revenue, but higher earnings than DDR. DDR is trading at a lower price-to-earnings ratio than Taubman Centers, indicating that it is currently the more affordable of the two stocks.
DDR pays an annual dividend of $0.76 per share and has a dividend yield of 9.1%. Taubman Centers pays an annual dividend of $2.50 per share and has a dividend yield of 3.9%. DDR pays out -1,900.0% of its earnings in the form of a dividend. Taubman Centers pays out 238.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DDR has raised its dividend for 8 consecutive years and Taubman Centers has raised its dividend for 7 consecutive years. DDR is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider and Institutional Ownership
79.9% of DDR shares are held by institutional investors. Comparatively, 99.9% of Taubman Centers shares are held by institutional investors. 16.1% of DDR shares are held by company insiders. Comparatively, 31.2% of Taubman Centers shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
This table compares DDR and Taubman Centers’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
DDR beats Taubman Centers on 9 of the 17 factors compared between the two stocks.
DDR Corp. is a self-administered and self-managed real estate investment trust. It operates through two segments: shopping centers and loan investments. It is in the business of acquiring, owning, developing, redeveloping, expanding, leasing and managing shopping centers. As of December 31, 2016, it owned and managed approximately 106 million total square feet of gross leasable area (GLA). As of December 31, 2016, the portfolio properties included 319 shopping centers (including 152 centers owned through joint ventures). As of December 31, 2016, the portfolio properties also included over 650 acres of undeveloped land, including parcels located adjacent to certain of the shopping centers. As of December 31, 2016, the portfolio properties aggregated to 75.8 million square feet of Company-owned GLA located in 35 states, plus Puerto Rico. These centers are in the Southeast and Midwest, with significant concentrations in Florida, Georgia, Ohio and North Carolina, as well as Puerto Rico.
About Taubman Centers
Taubman Centers, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company’s segment is focused on owning, developing and managing regional shopping centers. The Taubman Realty Group Limited Partnership (the Operating Partnership or TRG) is majority-owned partnership subsidiary of the Company that owns direct or indirect interests in all of its real estate properties. The Company owns, leases, acquires, disposes of, develops, expands and manages regional and super-regional shopping centers and interests therein. Its owned portfolio of operating centers as of December 31, 2016 consisted of 23 urban and suburban shopping centers operating in 11 the United States states, Puerto Rico, South Korea, and China. The consolidated businesses consist of shopping centers and entities that are controlled by ownership or contractual agreements, The Taubman Company LLC (Manager), and Taubman Properties Asia LLC and its subsidiaries (Taubman Asia).
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