Critical Analysis: Safehold (NYSE:SAFE) and Centerspace (NYSE:CSR)

Safehold (NYSE:SAFE) and Centerspace (NYSE:CSR) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Safehold and Centerspace, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Safehold	0	7	4	0	2.36
Centerspace	0	6	2	0	2.25

Safehold currently has a consensus price target of $19.33, suggesting a potential upside of 28.88%. Centerspace has a consensus price target of $69.86, suggesting a potential upside of 7.94%. Given Safehold’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Safehold is more favorable than Centerspace.

Profitability

This table compares Safehold and Centerspace’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Safehold	29.67%	4.78%	1.63%
Centerspace	11.14%	3.52%	1.54%

Insider and Institutional Ownership

70.4% of Safehold shares are owned by institutional investors. Comparatively, 79.0% of Centerspace shares are owned by institutional investors. 3.5% of Safehold shares are owned by insiders. Comparatively, 0.4% of Centerspace shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Safehold and Centerspace”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Safehold	$365.68 million	2.94	$105.76 million	$1.57	9.55
Centerspace	$260.98 million	4.14	-$10.69 million	$1.79	36.16

Safehold has higher revenue and earnings than Centerspace. Safehold is trading at a lower price-to-earnings ratio than Centerspace, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Safehold has a beta of 1.84, suggesting that its stock price is 84% more volatile than the S&P 500. Comparatively, Centerspace has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500.

Dividends

Safehold pays an annual dividend of $0.71 per share and has a dividend yield of 4.7%. Centerspace pays an annual dividend of $3.08 per share and has a dividend yield of 4.8%. Safehold pays out 45.2% of its earnings in the form of a dividend. Centerspace pays out 172.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Safehold has raised its dividend for 1 consecutive years and Centerspace has raised its dividend for 2 consecutive years. Centerspace is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Safehold beats Centerspace on 11 of the 17 factors compared between the two stocks.

About Safehold

Safehold Inc. (NYSE: SAFE) is revolutionizing real estate ownership by providing a new and better way for owners to unlock the value of the land beneath their buildings. Having created the modern ground lease industry in 2017, Safehold continues to help owners of high quality multifamily, office, industrial, hospitality, student housing, life science and mixed-use properties generate higher returns with less risk. The Company, which is taxed as a real estate investment trust (REIT), seeks to deliver safe, growing income and long-term capital appreciation to its shareholders.

About Centerspace

Centerspace is an owner and operator of apartment communities committed to providing great homes by focusing on integrity and serving others. Founded in 1970, as of September 30, 2023, Centerspace owned interests in 71 apartment communities consisting of 12,785 apartment homes located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. Centerspace was named a Top Workplace for the fourth consecutive year in 2023 by the Minneapolis Star Tribune.