American Homes 4 Rent (NYSE: AMH) and ARMOUR Residential REIT (NYSE:ARR) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, risk and valuation.
Risk & Volatility
American Homes 4 Rent has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500.
This table compares American Homes 4 Rent and ARMOUR Residential REIT’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|American Homes 4 Rent||$878.89 million||7.00||$6.69 million||($0.01)||-2,145.00|
|ARMOUR Residential REIT||$263.99 million||3.90||-$45.51 million||$5.06||4.85|
American Homes 4 Rent has higher revenue and earnings than ARMOUR Residential REIT. American Homes 4 Rent is trading at a lower price-to-earnings ratio than ARMOUR Residential REIT, indicating that it is currently the more affordable of the two stocks.
This table compares American Homes 4 Rent and ARMOUR Residential REIT’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%|
|ARMOUR Residential REIT||76.46%||9.39%||1.37%|
American Homes 4 Rent pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. ARMOUR Residential REIT pays an annual dividend of $2.28 per share and has a dividend yield of 9.3%. American Homes 4 Rent pays out -2,000.0% of its earnings in the form of a dividend. ARMOUR Residential REIT pays out 45.1% 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. American Homes 4 Rent has increased its dividend for 2 consecutive years.
Insider & Institutional Ownership
86.1% of American Homes 4 Rent shares are held by institutional investors. Comparatively, 51.0% of ARMOUR Residential REIT shares are held by institutional investors. 27.8% of American Homes 4 Rent shares are held by insiders. Comparatively, 1.5% of ARMOUR Residential REIT shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This is a breakdown of current ratings and target prices for American Homes 4 Rent and ARMOUR Residential REIT, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Homes 4 Rent||0||3||5||0||2.63|
|ARMOUR Residential REIT||0||0||0||0||N/A|
American Homes 4 Rent currently has a consensus price target of $25.13, indicating a potential upside of 17.13%. Given American Homes 4 Rent’s higher possible upside, equities research analysts plainly believe American Homes 4 Rent is more favorable than ARMOUR Residential REIT.
American Homes 4 Rent beats ARMOUR Residential REIT on 10 of the 16 factors compared between the two stocks.
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).
ARMOUR Residential REIT Company Profile
ARMOUR Residential REIT, Inc. is a real estate investment trust. The Company invests in and manages a leveraged portfolio of mortgage-backed securities (MBS) and mortgage loans. The Company invests in residential mortgage backed securities issued or guaranteed by a United States Government-sponsored enterprise (GSE), such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or a government agency, such as the Government National Mortgage Association (collectively, Agency Securities). The Company also invests in Interest-Only Securities, which are the interest portions of Agency Securities that are separated and sold individually from the principal portion of the same payment. The Company raises funds for additional funding through equity offerings (including preferred equity), unsecured debt securities and convertible securities (including warrants, preferred equity and debt), among others. It is managed by ARMOUR Capital Management LP.
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