Critical Review: Mid-America Apartment Communities (NYSE:MAA) and Broadstone Net Lease (NYSE:BNL)

Mid-America Apartment Communities (NYSE:MAA) and Broadstone Net Lease (NYSE:BNL) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, earnings, valuation, profitability, analyst recommendations and dividends.

Analyst Ratings

This is a summary of recent ratings and target prices for Mid-America Apartment Communities and Broadstone Net Lease, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mid-America Apartment Communities	2	12	8	0	2.27
Broadstone Net Lease	0	3	8	0	2.73

Mid-America Apartment Communities presently has a consensus price target of $154.89, indicating a potential upside of 12.45%. Broadstone Net Lease has a consensus price target of $20.10, indicating a potential upside of 14.76%. Given Broadstone Net Lease’s stronger consensus rating and higher possible upside, analysts plainly believe Broadstone Net Lease is more favorable than Mid-America Apartment Communities.

Volatility and Risk

Mid-America Apartment Communities has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Broadstone Net Lease has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500.

Valuation & Earnings

This table compares Mid-America Apartment Communities and Broadstone Net Lease”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mid-America Apartment Communities	$2.19 billion	7.36	$527.54 million	$4.72	29.18
Broadstone Net Lease	$431.80 million	7.68	$162.44 million	$0.47	37.27

Mid-America Apartment Communities has higher revenue and earnings than Broadstone Net Lease. Mid-America Apartment Communities is trading at a lower price-to-earnings ratio than Broadstone Net Lease, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

93.6% of Mid-America Apartment Communities shares are owned by institutional investors. Comparatively, 89.1% of Broadstone Net Lease shares are owned by institutional investors. 1.3% of Mid-America Apartment Communities shares are owned by insiders. Comparatively, 1.0% of Broadstone Net Lease shares are owned by 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.

Profitability

This table compares Mid-America Apartment Communities and Broadstone Net Lease’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mid-America Apartment Communities	25.23%	9.14%	4.69%
Broadstone Net Lease	20.04%	2.93%	1.69%

Dividends

Mid-America Apartment Communities pays an annual dividend of $6.06 per share and has a dividend yield of 4.4%. Broadstone Net Lease pays an annual dividend of $1.16 per share and has a dividend yield of 6.6%. Mid-America Apartment Communities pays out 128.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Broadstone Net Lease pays out 246.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mid-America Apartment Communities has increased its dividend for 16 consecutive years and Broadstone Net Lease has increased its dividend for 4 consecutive years.

Summary

Mid-America Apartment Communities beats Broadstone Net Lease on 10 of the 16 factors compared between the two stocks.

About Mid-America Apartment Communities

Mid-America Apartment Communities, Inc. is a real estate investment trust, which engages in the operation, acquisition, and development of apartment communities. It operates through the Same Store and Non-Same Store segments. The Same Store Communities segment represents those apartment communities that have been owned and stabilized for at least 12 months as of the first day of the calendar year. The Non-Same Store segment includes recent acquisitions, communities in development or lease-up. The company was founded in 1994 and is headquartered in Germantown, TN.

About Broadstone Net Lease

Broadstone Net Lease, Inc. (the Corporation) is a Maryland corporation formed on October 18, 2007, that elected to be taxed as a real estate investment trust (REIT) commencing with the taxable year ended December 31, 2008. Broadstone Net Lease, LLC (the Corporation’s operating company, or the OP), is the entity through which the Corporation conducts its business and owns (either directly or through subsidiaries) all of the Corporation’s properties. The Corporation is the sole managing member of the OP. The membership units not owned by the Corporation are referred to as OP Units or non-controlling interests. As the Corporation conducts substantially all of its operations through the OP, it is structured as what is referred to as an umbrella partnership real estate investment trust (UPREIT). The Corporation’s common stock is listed on the New York Stock Exchange under the symbol BNL.