Critical Survey: Taubman Centers (TCO) versus Kite Realty Group Trust (NYSE:KRG)

Taubman Centers (NYSE: TCO) and Kite Realty Group Trust (NYSE:KRG) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, risk, analyst recommendations, institutional ownership, valuation and earnings.

Dividends

Taubman Centers pays an annual dividend of $2.50 per share and has a dividend yield of 5.1%. Kite Realty Group Trust pays an annual dividend of $1.21 per share and has a dividend yield of 6.4%. Taubman Centers pays out 193.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kite Realty Group Trust pays out 864.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Taubman Centers has raised its dividend for 3 consecutive years and Kite Realty Group Trust has raised its dividend for 7 consecutive years. Kite Realty Group Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Taubman Centers and Kite Realty Group Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Taubman Centers $606.47 million 4.87 $311.97 million $1.29 37.67
Kite Realty Group Trust $360.76 million 4.39 $224.39 million $0.14 135.29

Taubman Centers has higher revenue and earnings than Kite Realty Group Trust. Taubman Centers is trading at a lower price-to-earnings ratio than Kite Realty Group Trust, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

95.8% of Kite Realty Group Trust shares are held by institutional investors. 31.2% of Taubman Centers shares are held by company insiders. Comparatively, 1.9% of Kite Realty Group Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Taubman Centers and Kite Realty Group Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Taubman Centers 2 5 3 0 2.10
Kite Realty Group Trust 0 4 3 1 2.63

Taubman Centers currently has a consensus price target of $66.17, suggesting a potential upside of 36.15%. Kite Realty Group Trust has a consensus price target of $26.00, suggesting a potential upside of 37.28%. Given Kite Realty Group Trust’s stronger consensus rating and higher probable upside, analysts clearly believe Kite Realty Group Trust is more favorable than Taubman Centers.

Profitability

This table compares Taubman Centers and Kite Realty Group Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Taubman Centers 14.71% -110.46% 2.25%
Kite Realty Group Trust 3.29% 0.73% 0.33%

Risk and Volatility

Taubman Centers has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500. Comparatively, Kite Realty Group Trust has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500.

Summary

Taubman Centers beats Kite Realty Group Trust on 9 of the 17 factors compared between the two stocks.

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).

About Kite Realty Group Trust

Kite Realty Group Trust is a real estate investment trust. The Company, through its subsidiary, Kite Realty Group, L.P., owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development and redevelopment of neighborhood and community shopping centers in selected markets in the United States. As of December 31, 2016, the Company owned interests in 108 operating retail properties totaling approximately 21.4 million square feet of gross leasable area (including approximately 6.3 million square feet of non-owned anchor space) located in 20 states. As of December 31, 2016, the Company had an interest in two development projects under construction. In addition to its development projects, as of December 31, 2016, the Company had nine redevelopment projects. As of December 31, 2016, the Company owned interests in one office operating property and an associated parking garage.

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