Critical Survey: Pennsylvania Real Estate Investment Trust (PEI) and Ramco-Gershenson Properties Trust (NYSE:RPT)

Ramco-Gershenson Properties Trust (NYSE: RPT) and Pennsylvania Real Estate Investment Trust (NYSE:PEI) are both small-cap financials companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, dividends, earnings, profitability, valuation, institutional ownership and risk.

Dividends

Ramco-Gershenson Properties Trust pays an annual dividend of $0.88 per share and has a dividend yield of 6.3%. Pennsylvania Real Estate Investment Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.2%. Ramco-Gershenson Properties Trust pays out 154.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pennsylvania Real Estate Investment Trust pays out -67.7% of its earnings in the form of a dividend. Ramco-Gershenson Properties Trust has raised its dividend for 5 consecutive years and Pennsylvania Real Estate Investment Trust has raised its dividend for 6 consecutive years. Pennsylvania Real Estate Investment Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Ramco-Gershenson Properties Trust and Pennsylvania Real Estate Investment Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ramco-Gershenson Properties Trust $260.93 million 4.22 $59.66 million $0.57 24.33
Pennsylvania Real Estate Investment Trust $399.95 million 2.04 -$11.34 million ($1.24) -9.43

Ramco-Gershenson Properties Trust has higher earnings, but lower revenue than Pennsylvania Real Estate Investment Trust. Pennsylvania Real Estate Investment Trust is trading at a lower price-to-earnings ratio than Ramco-Gershenson Properties Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ramco-Gershenson Properties Trust and Pennsylvania Real Estate Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ramco-Gershenson Properties Trust 20.75% 6.96% 2.55%
Pennsylvania Real Estate Investment Trust -16.35% -7.60% -2.34%

Volatility & Risk

Ramco-Gershenson Properties Trust has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500. Comparatively, Pennsylvania Real Estate Investment Trust has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Ramco-Gershenson Properties Trust and Pennsylvania Real Estate Investment Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ramco-Gershenson Properties Trust 1 5 4 0 2.30
Pennsylvania Real Estate Investment Trust 1 6 0 0 1.86

Ramco-Gershenson Properties Trust presently has a consensus target price of $14.86, suggesting a potential upside of 7.12%. Pennsylvania Real Estate Investment Trust has a consensus target price of $13.83, suggesting a potential upside of 18.33%. Given Pennsylvania Real Estate Investment Trust’s higher possible upside, analysts plainly believe Pennsylvania Real Estate Investment Trust is more favorable than Ramco-Gershenson Properties Trust.

Institutional and Insider Ownership

98.2% of Ramco-Gershenson Properties Trust shares are held by institutional investors. Comparatively, 97.7% of Pennsylvania Real Estate Investment Trust shares are held by institutional investors. 1.6% of Ramco-Gershenson Properties Trust shares are held by insiders. Comparatively, 4.4% of Pennsylvania Real Estate Investment Trust shares are held 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.

Summary

Ramco-Gershenson Properties Trust beats Pennsylvania Real Estate Investment Trust on 10 of the 17 factors compared between the two stocks.

About Ramco-Gershenson Properties Trust

Ramco-Gershenson Properties Trust is an equity real estate investment trust. The Company’s primary business is the ownership, management, redevelopment, development and operation of retail shopping centers. As of December 31, 2016, it owned and managed multi-anchored shopping centers in 12 metropolitan markets in the United States. It conducts its business through its operating partnership, Ramco-Gershenson Properties, L.P. It invests in large, multi-anchored shopping centers that include national chain store tenants and supermarket tenants. National chain anchor tenants in its centers include, among others, Bed Bath and Beyond, Dick’s Sporting Goods, and Home Depot. Supermarket anchor tenants in its centers include, among others, Publix Super Market, Whole Foods, Kroger and Sprouts. Its shopping centers are located in metropolitan markets, such as Metro Detroit, Southeast Florida, Greater Denver, Cincinnati, St. Louis, Jacksonville, Tampa/Lakeland, Milwaukee, Chicago and Atlanta.

About Pennsylvania Real Estate Investment Trust

Pennsylvania Real Estate Investment Trust (PREIT) is a self-managed and self-administered real estate investment trust (REIT). The Company’s primary business is owning and operating retail shopping malls, which it does primarily through operating partnership, PREIT Associates, L.P. (PREIT Associates). The Company is engaged in the ownership, management, leasing, acquisition, redevelopment, development and disposition of shopping malls. The Company has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region. As of December 31, 2016, the Company owned interests in 30 retail properties, of which 26 are operating properties and four are development or redevelopment properties. As of December 31, 2016, the Company’s 26 operating properties included 22 shopping malls and four other retail properties, had a total of 21.7 million square feet and were located in nine states.

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