American Assets Trust (NYSE:AAT) and istar (NYSE:STAR) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, earnings, risk, valuation and dividends.
Earnings and Valuation
This table compares American Assets Trust and istar’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|American Assets Trust||$314.98 million||5.51||$40.13 million||$1.92||19.14|
|istar||$679.20 million||1.11||$175.68 million||$2.31||4.80|
American Assets Trust pays an annual dividend of $1.08 per share and has a dividend yield of 2.9%. istar pays an annual dividend of $0.36 per share and has a dividend yield of 3.2%. American Assets Trust pays out 56.3% of its earnings in the form of a dividend. istar pays out 15.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. istar is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk & Volatility
American Assets Trust has a beta of 0.32, indicating that its stock price is 68% less volatile than the S&P 500. Comparatively, istar has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500.
Institutional and Insider Ownership
94.4% of American Assets Trust shares are held by institutional investors. Comparatively, 82.7% of istar shares are held by institutional investors. 37.9% of American Assets Trust shares are held by company insiders. Comparatively, 5.0% of istar shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
This table compares American Assets Trust and istar’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Assets Trust||5.70%||2.25%||0.84%|
This is a summary of current recommendations and price targets for American Assets Trust and istar, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Assets Trust||1||0||3||0||2.50|
American Assets Trust presently has a consensus target price of $40.75, suggesting a potential upside of 10.88%. istar has a consensus target price of $14.00, suggesting a potential upside of 26.35%. Given istar’s higher probable upside, analysts plainly believe istar is more favorable than American Assets Trust.
istar beats American Assets Trust on 10 of the 16 factors compared between the two stocks.
About American Assets Trust
American Assets Trust, Inc. (the ?company?) is a full service, vertically integrated and self-administered real estate investment trust, or REIT, headquartered in San Diego, California. The company has over 50 years of experience in acquiring, improving, developing and managing premier retail, office and residential properties throughout the United States in some of the nation's most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Oregon, Washington, Texas and Hawaii. The company's retail portfolio comprises approximately 3.2 million rentable square feet, and its office portfolio comprises approximately 2.6 million square feet. In addition, the company owns one mixed-use property (including approximately 97,000 rentable square feet of retail space and a 369-room all-suite hotel) and 2,112 multifamily units. In 2011, the company was formed to succeed to the real estate business of American Assets, Inc., a privately held corporation founded in 1967 and, as such, has significant experience, long-standing relationships and extensive knowledge of its core markets, submarkets and asset classes.
iStar (NYSE: STAR) finances, invests in and develops real estate and real estate related projects as part of its fully-integrated investment platform. Building on over two decades of experience and $40 billion of transactions, iStar brings uncommon capabilities and new ways of thinking to commercial real estate and adapts its investment strategy to changing market conditions. The Company is structured as a real estate investment trust ("REIT"), with a diversified portfolio focused on larger assets located in major metropolitan markets.
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