AvalonBay Communities (NYSE: AVB) and UMH Properties (NYSE:UMH) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.
Institutional and Insider Ownership
97.4% of AvalonBay Communities shares are held by institutional investors. Comparatively, 54.3% of UMH Properties shares are held by institutional investors. 0.5% of AvalonBay Communities shares are held by insiders. Comparatively, 11.6% of UMH Properties shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
AvalonBay Communities pays an annual dividend of $5.68 per share and has a dividend yield of 3.1%. UMH Properties pays an annual dividend of $0.72 per share and has a dividend yield of 4.8%. 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. UMH Properties pays out -799.9% of its earnings in the form of a dividend. AvalonBay Communities has increased its dividend for 5 consecutive years. UMH Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares AvalonBay Communities and UMH Properties’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation and Earnings
This table compares AvalonBay Communities and UMH Properties’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|AvalonBay Communities||$2.05 billion||12.18||$1.30 billion||$6.40||28.33|
|UMH Properties||$105.77 million||4.79||$41.90 million||($0.09)||-165.98|
AvalonBay Communities has higher revenue and earnings than UMH Properties. UMH 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.
This is a breakdown of current ratings and price targets for AvalonBay Communities and UMH Properties, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
AvalonBay Communities currently has a consensus price target of $196.86, indicating a potential upside of 8.56%. UMH Properties has a consensus price target of $18.88, indicating a potential upside of 26.34%. Given UMH Properties’ stronger consensus rating and higher possible upside, analysts plainly believe UMH Properties is more favorable than AvalonBay Communities.
Volatility and Risk
AvalonBay Communities has a beta of 0.36, meaning that its stock price is 64% less volatile than the S&P 500. Comparatively, UMH Properties has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.
AvalonBay Communities beats UMH Properties on 11 of the 17 factors compared between the two stocks.
AvalonBay Communities Company Profile
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.
UMH Properties Company Profile
UMH Properties, Inc. (UMH) is a real estate investment trust (REIT). The Company’s primary business is the ownership and operation of manufactured home communities, including leasing manufactured home sites to private manufactured home owners. The Company also leases homes to residents, and through its taxable REIT subsidiary, UMH Sales and Finance, Inc. (S&F), conducts manufactured home sales in its communities. As of May 31, 2017, the Company owned 107 manufactured home communities consisting of approximately 19,400 developed sites. The communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana and Michigan. In connection with the operation of its communities, UMH also leases homes to prospective tenants. As of December 31, 2016, UMH owned a total of 4,700 rental homes, representing approximately 26% of its developed sites. These rental homes are owned by the Company and rented to residents.
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