Home Properties (HME) & American Homes 4 Rent (AMH) Critical Survey

Home Properties (NYSE: HME) and American Homes 4 Rent (NYSE:AMH) are both mid-cap residential reits companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Valuation & Earnings

This table compares Home Properties and American Homes 4 Rent’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Home Properties N/A N/A N/A $2.32 32.43
American Homes 4 Rent $878.89 million 6.42 $6.69 million $0.01 1,969.00

American Homes 4 Rent has higher revenue and earnings than Home Properties. Home Properties is trading at a lower price-to-earnings ratio than American Homes 4 Rent, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

92.6% of American Homes 4 Rent shares are owned by institutional investors. 27.8% of American Homes 4 Rent shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for Home Properties and American Homes 4 Rent, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Home Properties 0 0 0 0 N/A
American Homes 4 Rent 0 1 8 0 2.89

American Homes 4 Rent has a consensus price target of $25.22, indicating a potential upside of 28.10%. Given American Homes 4 Rent’s higher possible upside, analysts plainly believe American Homes 4 Rent is more favorable than Home Properties.

Dividends

American Homes 4 Rent pays an annual dividend of $0.20 per share and has a dividend yield of 1.0%. Home Properties does not pay a dividend. American Homes 4 Rent pays out 2,000.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Home Properties and American Homes 4 Rent’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Home Properties 18.18% 6.60% 2.87%
American Homes 4 Rent 6.56% 1.15% 0.75%

Summary

American Homes 4 Rent beats Home Properties on 7 of the 12 factors compared between the two stocks.

Home Properties Company Profile

Home Properties, Inc. (Home Properties) is a self-administered and self-managed real estate investment trust (REIT). The Company owns, operates, acquires and repositions apartment communities in suburbs of metropolitan areas, primarily along the East Coast of the United States. The Company conducts its business through Home Properties, L.P. (the Operating Partnership), and a management company, Home Properties Resident Services, Inc. (HPRS). As of December 31, 2014, the Company owned and operated 121 communities with 42,107 apartment units. The Company’s properties are two- and three-story garden style apartment buildings in landscaped settings and brick or other masonry construction. As of December 31, 2014, approximately 26.6%, 24.9%, 14.0%, 8.5% and 8.5% of the Company’s Properties are located in the Washington, D.C., Baltimore, Philadelphia, Long Island and Northern New Jersey markets, respectively.

American Homes 4 Rent Company Profile

American Homes 4 Rent is an internally managed real estate investment trust (REIT) focused on acquiring, renovating, leasing and operating single-family homes as rental properties. The Company’s primary objective is to generate attractive risk-adjusted returns for its shareholders through dividends and capital appreciation by acquiring, renovating, leasing and operating single-family homes as rental properties. As of December 31, 2016, it owned 48,422 single-family properties in 22 states, including 1,119 properties held for sale, and had an additional 47 properties in escrow that it intended to acquire. Its integrated operating platform offers property management, acquisitions, construction, marketing, leasing, financial and administrative functions. The Company may seek to invest in condominium units, townhouses and real estate-related debt investments. The Company is externally managed and advised by American Homes 4 Rent Advisor, LLC (the Advisor).

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