Critical Review: Regency Centers Corporation (REG) and Retail Opportunity Investments Corp. (ROIC)

Retail Opportunity Investments Corp. (NASDAQ: ROIC) and Regency Centers Corporation (NYSE:REG) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, earnings, risk, valuation, institutional ownership and profitability.

Volatility and Risk

Retail Opportunity Investments Corp. has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500. Comparatively, Regency Centers Corporation has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500.

Valuation & Earnings

This table compares Retail Opportunity Investments Corp. and Regency Centers Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Retail Opportunity Investments Corp. $237.19 million 8.94 $32.48 million $0.34 56.82
Regency Centers Corporation $614.37 million 18.61 $164.92 million $0.90 74.68

Regency Centers Corporation has higher revenue and earnings than Retail Opportunity Investments Corp.. Retail Opportunity Investments Corp. is trading at a lower price-to-earnings ratio than Regency Centers Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Retail Opportunity Investments Corp. and Regency Centers Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Retail Opportunity Investments Corp. 14.13% 2.86% 1.34%
Regency Centers Corporation 17.59% 2.82% 1.65%

Dividends

Retail Opportunity Investments Corp. pays an annual dividend of $0.75 per share and has a dividend yield of 3.9%. Regency Centers Corporation pays an annual dividend of $2.12 per share and has a dividend yield of 3.2%. Retail Opportunity Investments Corp. pays out 220.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Regency Centers Corporation pays out 235.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Retail Opportunity Investments Corp. has raised its dividend for 3 consecutive years. Retail Opportunity Investments Corp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

95.4% of Retail Opportunity Investments Corp. shares are owned by institutional investors. Comparatively, 90.7% of Regency Centers Corporation shares are owned by institutional investors. 2.2% of Retail Opportunity Investments Corp. shares are owned by company insiders. Comparatively, 12.7% of Regency Centers Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Retail Opportunity Investments Corp. and Regency Centers Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Retail Opportunity Investments Corp. 0 4 3 0 2.43
Regency Centers Corporation 0 6 3 1 2.50

Retail Opportunity Investments Corp. currently has a consensus price target of $22.17, indicating a potential upside of 14.73%. Regency Centers Corporation has a consensus price target of $70.50, indicating a potential upside of 4.90%. Given Retail Opportunity Investments Corp.’s higher probable upside, research analysts clearly believe Retail Opportunity Investments Corp. is more favorable than Regency Centers Corporation.

Summary

Regency Centers Corporation beats Retail Opportunity Investments Corp. on 10 of the 17 factors compared between the two stocks.

Retail Opportunity Investments Corp. Company Profile

Retail Opportunity Investments Corp. (ROIC) is a fully integrated, self-managed real estate investment trust (REIT). The Company specializes in the acquisition, ownership and management of necessity-based community and neighborhood shopping centers on the west coast of the United States, anchored by supermarkets and drugstores. Retail Opportunity Investments Partnership, LP is the operating partnership of the Company. The Operating Partnership holds substantially all the assets of the Company and directly or indirectly holds the ownership interests in the Company’s real estate ventures. The Operating Partnership conducts the operations of the Company’s business. As of December 31, 2016, the Company’s portfolio consisted of 82 properties (81 retail and one office) totaling approximately 9.4 million square feet of gross leasable area (GLA). As of December 31, 2016, the Company’s portfolio was approximately 97.6% leased.

Regency Centers Corporation Company Profile

Regency Centers Corporation is a real estate investment trust (REIT). The Company is the general partner of Regency Centers, L.P. (the Operating Partnership). The Company is engaged in the ownership, management, leasing, acquisition and development of retail shopping centers through the Operating Partnership. The Company’s properties include Palm Valley Marketplace, Shops at Arizona, Amerige Heights Town Center, Clayton Valley Shopping Center, Five Points Shopping Center, French Valley Village Center, Hasley Canyon Village, Pleasant Hill Shopping Center, Snell & Branham Plaza, Applewood Shopping Center, Kent Place, Black Rock, Spring Valley Shopping Center and Pebblebrook Plaza. As of December 31, 2016, the Company owned all of the Preferred Units of the Operating Partnership and approximately 99.9% of the Units in the Operating Partnership. As of December 31, 2016, it owned direct or partial interests in 307 shopping centers.

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