Alexandria Real Estate Equities (ARE) versus PS Business Parks (PSB) Head to Head Analysis

Alexandria Real Estate Equities (NYSE: ARE) and PS Business Parks (NYSE:PSB) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, analyst recommendations, dividends, earnings and risk.

Dividends

Alexandria Real Estate Equities pays an annual dividend of $3.60 per share and has a dividend yield of 3.0%. PS Business Parks pays an annual dividend of $3.40 per share and has a dividend yield of 3.0%. Alexandria Real Estate Equities pays out 229.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PS Business Parks pays out 113.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Alexandria Real Estate Equities has increased its dividend for 4 consecutive years and PS Business Parks has increased its dividend for 7 consecutive years. PS Business Parks is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Alexandria Real Estate Equities and PS Business Parks, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alexandria Real Estate Equities 0 1 6 0 2.86
PS Business Parks 1 1 0 0 1.50

Alexandria Real Estate Equities currently has a consensus price target of $100.34, indicating a potential downside of 16.63%. PS Business Parks has a consensus price target of $135.00, indicating a potential upside of 19.47%. Given PS Business Parks’ higher probable upside, analysts clearly believe PS Business Parks is more favorable than Alexandria Real Estate Equities.

Insider & Institutional Ownership

96.3% of Alexandria Real Estate Equities shares are held by institutional investors. Comparatively, 71.4% of PS Business Parks shares are held by institutional investors. 1.5% of Alexandria Real Estate Equities shares are held by company insiders. Comparatively, 1.6% of PS Business Parks 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.

Profitability

This table compares Alexandria Real Estate Equities and PS Business Parks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alexandria Real Estate Equities 14.77% 3.08% 1.56%
PS Business Parks 42.43% 9.85% 8.29%

Risk & Volatility

Alexandria Real Estate Equities has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500. Comparatively, PS Business Parks has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500.

Valuation and Earnings

This table compares Alexandria Real Estate Equities and PS Business Parks’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alexandria Real Estate Equities $1.13 billion 10.80 $169.09 million $1.57 76.66
PS Business Parks $387.39 million 7.95 $128.02 million $3.00 37.67

Alexandria Real Estate Equities has higher revenue and earnings than PS Business Parks. PS Business Parks is trading at a lower price-to-earnings ratio than Alexandria Real Estate Equities, indicating that it is currently the more affordable of the two stocks.

Summary

PS Business Parks beats Alexandria Real Estate Equities on 9 of the 17 factors compared between the two stocks.

Alexandria Real Estate Equities Company Profile

Alexandria Real Estate Equities, Inc. is a real estate investment (REIT). The Company is engaged in the business of providing space for lease to the life science and technology industries. It focuses on collaborative life science and technology campuses. It develops urban cluster campuses and ecosystems. As of December 31, 2016, the Company had 199 properties in North America. As of December 31, 2016, its asset base in North America consisted of 25.2 million square feet, including 19.9 million rentable square feet/foot (RSF) of operating properties, and development and redevelopment of under construction or pre-construction, as well as 5.3 million square feet of future ground-up development projects. Its properties are located in various areas, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland and Research Triangle Park. Its properties include Alexandria Technology Square, Alexandria Park at 128 and Alexandria Technology Center-Gateway.

PS Business Parks Company Profile

PS Business Parks, Inc. is a self-advised and self-managed real estate investment trust (REIT). The Company owns, operates and develops commercial properties, primarily multi-tenant flex, office and industrial parks. It focuses on owning concentrated business parks. PS Business Parks, L.P. (the Operating Partnership) is a California limited partnership, which owns directly or indirectly substantially all of its assets and through, which the Company conducts substantially all of its business. PSB is the partner of the Operating Partnership and, as of December 31, 2016, owned 77.9% of the common partnership units. The remaining common partnership units are owned by Public Storage (PS). As of December 31, 2016, the Company owned and operated 28.1 million rentable square feet of commercial space, comprising 99 business parks, in the states, including California, Texas, Virginia, Florida, Maryland and Washington. It also manages 684,000 rentable square feet on behalf of PS.

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