American Homes 4 Rent (AMH) and Silver Bay Realty Trust (SBY) Critical Analysis

American Homes 4 Rent (NYSE: AMH) and Silver Bay Realty Trust (NYSE:SBY) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for American Homes 4 Rent and Silver Bay Realty Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Homes 4 Rent 0 1 8 0 2.89
Silver Bay Realty Trust 0 3 0 0 2.00

American Homes 4 Rent currently has a consensus target price of $25.22, indicating a potential upside of 31.30%. Silver Bay Realty Trust has a consensus target price of $20.25, indicating a potential upside of Infinity. Given Silver Bay Realty Trust’s higher possible upside, analysts clearly believe Silver Bay Realty Trust is more favorable than American Homes 4 Rent.

Dividends

American Homes 4 Rent pays an annual dividend of $0.20 per share and has a dividend yield of 1.0%. Silver Bay Realty Trust pays an annual dividend of $0.52 per share. American Homes 4 Rent pays out -2,000.0% of its earnings in the form of a dividend. Silver Bay Realty Trust pays out -742.9% 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. American Homes 4 Rent has increased its dividend for 4 consecutive years. American Homes 4 Rent is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

88.2% of American Homes 4 Rent shares are held by institutional investors. Comparatively, 73.6% of Silver Bay Realty Trust shares are held by institutional investors. 27.8% of American Homes 4 Rent shares are held by company insiders. Comparatively, 7.3% of Silver Bay Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares American Homes 4 Rent and Silver Bay Realty Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Homes 4 Rent $878.89 million 6.27 $6.69 million ($0.01) -1,921.00
Silver Bay Realty Trust N/A N/A N/A ($0.07) N/A

American Homes 4 Rent has higher revenue and earnings than Silver Bay Realty Trust. American Homes 4 Rent is trading at a lower price-to-earnings ratio than Silver Bay Realty Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares American Homes 4 Rent and Silver Bay Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Homes 4 Rent 6.56% 1.15% 0.75%
Silver Bay Realty Trust -5.71% -1.42% -0.61%

Summary

American Homes 4 Rent beats Silver Bay Realty Trust on 13 of the 14 factors compared between the two stocks.

American Homes 4 Rent Company Profile

American Homes 4 Rent is an internally managed real estate investment trust (REIT) focused on acquiring, renovating, leasing and operating single-family homes as rental properties. The Company’s primary objective is to generate attractive risk-adjusted returns for its shareholders through dividends and capital appreciation by acquiring, renovating, leasing and operating single-family homes as rental properties. As of December 31, 2016, it owned 48,422 single-family properties in 22 states, including 1,119 properties held for sale, and had an additional 47 properties in escrow that it intended to acquire. Its integrated operating platform offers property management, acquisitions, construction, marketing, leasing, financial and administrative functions. The Company may seek to invest in condominium units, townhouses and real estate-related debt investments. The Company is externally managed and advised by American Homes 4 Rent Advisor, LLC (the Advisor).

Silver Bay Realty Trust Company Profile

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.

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