AvalonBay Communities (NYSE:AVB) versus American Residential Properties (ARPI) Head-To-Head Review

American Residential Properties (NYSE: ARPI) and AvalonBay Communities (NYSE:AVB) are both financials companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, risk, valuation, earnings, analyst recommendations, institutional ownership and profitability.

Dividends

American Residential Properties pays an annual dividend of $0.40 per share. AvalonBay Communities pays an annual dividend of $5.68 per share and has a dividend yield of 3.4%. American Residential Properties pays out -28.6% of its earnings in the form of a dividend. AvalonBay Communities pays out 88.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Residential Properties has increased its dividend for 6 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for American Residential Properties and AvalonBay Communities, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Residential Properties 0 0 0 0 N/A
AvalonBay Communities 1 8 8 0 2.41

AvalonBay Communities has a consensus target price of $200.00, indicating a potential upside of 18.88%.

Earnings & Valuation

This table compares American Residential Properties and AvalonBay Communities’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Residential Properties N/A N/A N/A ($1.40) N/A
AvalonBay Communities $2.05 billion 11.36 $1.03 billion $6.40 26.29

AvalonBay Communities has higher revenue and earnings than American Residential Properties. American Residential Properties is trading at a lower price-to-earnings ratio than AvalonBay Communities, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares American Residential Properties and AvalonBay Communities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Residential Properties -38.70% -9.17% -3.64%
AvalonBay Communities 41.55% 8.66% 4.94%

Institutional and Insider Ownership

94.8% of AvalonBay Communities shares are held by institutional investors. 0.5% of AvalonBay Communities shares are held by company 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.

Summary

AvalonBay Communities beats American Residential Properties on 10 of the 12 factors compared between the two stocks.

About American Residential Properties

American Residential Properties, Inc. is an internally managed real estate investment company, which is organized as a real estate investment trust. The Company acquires, owns, renovates, and manages single-family homes as rental properties. American Residential Properties OP, L.P. acts as its operating partnership. American Residential Leasing Company, LLC is a wholly owned subsidiary of its operating partnership. The Company owns 8,893 properties in Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Nevada, North Carolina, Ohio, South Carolina, Tennessee and Texas that were 81% leased, and it managed an additional 437 properties for ARP Phoenix Fund I, LP in Arizona and Nevada. In addition to its primary business, the Company has a private mortgage financing business.

About AvalonBay Communities

AvalonBay Communities, Inc. is a real estate investment trust (REIT). The Company is focused on the development, redevelopment, acquisition, ownership and operation of multifamily communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California. Its segments include Established Communities, Other Stabilized Communities and Development/Redevelopment Communities. As of June 30, 2017, the Company owned or held a direct or indirect ownership interest in 287 apartment communities containing 83,123 apartment homes in 10 states and the District of Columbia, of which 23 communities were under development and nine communities were under redevelopment. It operates its apartment communities under three core brands: Avalon, AVA and Eaves by Avalon. Its real estate investments consist of operating apartment communities, communities in various stages of development (Development Communities) and Development Rights.

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