American Homes 4 Rent (NYSE: AMH) and Apartment Investment and Management (NYSE:AIV) are both mid-cap financials companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.
American Homes 4 Rent pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Apartment Investment and Management pays an annual dividend of $1.44 per share and has a dividend yield of 3.3%. 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. Apartment Investment and Management pays out 464.5% 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 Homes 4 Rent has increased its dividend for 6 consecutive years. Apartment Investment and Management is clearly the better dividend stock, given its higher yield and lower payout ratio.
88.2% of American Homes 4 Rent shares are held by institutional investors. Comparatively, 98.2% of Apartment Investment and Management shares are held by institutional investors. 27.8% of American Homes 4 Rent shares are held by insiders. Comparatively, 1.2% of Apartment Investment and Management shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Earnings and Valuation
This table compares American Homes 4 Rent and Apartment Investment and Management’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|American Homes 4 Rent||$878.89 million||7.01||$6.69 million||$0.01||2,149.00|
|Apartment Investment and Management||$995.85 million||6.85||$430.41 million||$0.31||140.16|
Apartment Investment and Management has higher revenue and earnings than American Homes 4 Rent. Apartment Investment and Management 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.
This is a breakdown of recent recommendations and price targets for American Homes 4 Rent and Apartment Investment and Management, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Homes 4 Rent||0||1||8||0||2.89|
|Apartment Investment and Management||1||4||3||0||2.25|
American Homes 4 Rent currently has a consensus target price of $25.22, indicating a potential upside of 17.37%. Apartment Investment and Management has a consensus target price of $47.88, indicating a potential upside of 10.18%. Given American Homes 4 Rent’s stronger consensus rating and higher possible upside, equities analysts clearly believe American Homes 4 Rent is more favorable than Apartment Investment and Management.
Risk and Volatility
American Homes 4 Rent has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500. Comparatively, Apartment Investment and Management has a beta of 0.46, indicating that its stock price is 54% less volatile than the S&P 500.
This table compares American Homes 4 Rent and Apartment Investment and Management’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Homes 4 Rent||6.56%||1.15%||0.75%|
|Apartment Investment and Management||21.36%||13.81%||3.45%|
Apartment Investment and Management beats American Homes 4 Rent on 9 of the 17 factors compared between the two stocks.
About American Homes 4 Rent
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).
About Apartment Investment and Management
Apartment Investment and Management Company (Aimco) is a self-administered and self-managed real estate investment trust (REIT). Aimco, through its subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, holds the ownership interests in the Aimco Operating Partnership. It operates through two segments: conventional real estate and affordable real estate. As of December 31, 2016, its real estate portfolio consisted of 189 apartment communities with 46,311 apartment homes. Aimco Operating Partnership conducts the Company’s business, which is focused on the ownership, management, redevelopment and limited development of apartment communities located in the coastal and job growth markets of the United States. Its Conventional segment consists of apartment communities it classifies as Conventional Same Store and Conventional Non-Same Store. Its affordable portfolio consists primarily of apartment communities that it manages that are owned through low-income housing tax credit partnerships.
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