Head to Head Review: Sun Communities (SUI) and Starwood Waypoint Homes (SFR)

Sun Communities (NYSE: SUI) and Starwood Waypoint Homes (NYSE:SFR) are both mid-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their profitability, analyst recommendations, dividends, earnings, risk, valuation and institutional ownership.

Dividends

Sun Communities pays an annual dividend of $2.68 per share and has a dividend yield of 3.2%. Starwood Waypoint Homes pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. Sun Communities pays out 362.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Starwood Waypoint Homes pays out -314.3% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Sun Communities and Starwood Waypoint Homes’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sun Communities $833.78 million 7.99 $31.32 million $0.74 113.46
Starwood Waypoint Homes $575.68 million 8.28 -$81.26 million ($0.28) -132.61

Sun Communities has higher revenue and earnings than Starwood Waypoint Homes. Starwood Waypoint Homes is trading at a lower price-to-earnings ratio than Sun Communities, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and recommmendations for Sun Communities and Starwood Waypoint Homes, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sun Communities 0 1 5 0 2.83
Starwood Waypoint Homes 0 4 6 0 2.60

Sun Communities currently has a consensus target price of $92.00, suggesting a potential upside of 9.58%. Starwood Waypoint Homes has a consensus target price of $37.50, suggesting a potential upside of 1.00%. Given Sun Communities’ stronger consensus rating and higher probable upside, equities analysts plainly believe Sun Communities is more favorable than Starwood Waypoint Homes.

Institutional & Insider Ownership

93.2% of Sun Communities shares are owned by institutional investors. 4.2% of Sun Communities shares are owned by insiders. Comparatively, 5.0% of Starwood Waypoint Homes shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Sun Communities has a beta of 0.15, indicating that its stock price is 85% less volatile than the S&P 500. Comparatively, Starwood Waypoint Homes has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.

Profitability

This table compares Sun Communities and Starwood Waypoint Homes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sun Communities 7.37% 2.76% 1.17%
Starwood Waypoint Homes -13.10% -2.63% -1.19%

Summary

Sun Communities beats Starwood Waypoint Homes on 11 of the 16 factors compared between the two stocks.

Sun Communities Company Profile

Sun Communities, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company is a fully integrated real estate company, which, together with its affiliates and predecessors, has been in the business of acquiring, operating, developing, and expanding manufactured housing (MH) and recreational vehicle (RV). As of December 31, 2016, it owned and operated or had an interest in a portfolio of properties located throughout the United States and Ontario, Canada, including 226 MH communities, 87 RV communities, and 28 properties containing both MH and RV sites. The Company operates through two segments: Real Property Operations and Home Sales and Rentals. The Real Property Operations segment owns, operates, or has an interest in a portfolio, and develops MH communities and RV communities throughout the United States and is in the business of acquiring, operating, and expanding MH and RV communities.

Starwood Waypoint Homes Company Profile

Starwood Waypoint Homes, formerly Colony Starwood Homes, is an internally managed real estate investment trust (REIT). The Company was formed primarily to acquire, renovate, lease and manage residential assets in select markets across the United States. It is focused on acquiring single-family rental (SFR) homes through a variety of channels, renovating these homes to the extent necessary and leasing them to qualified residents. The Company operates through two segments, which are represented by its portfolio of SFR homes and its portfolio of NPLs owned in the joint venture with Prime Asset Fund VI, LLC (Prime). The Company identifies and pursues individual home acquisition opportunities through various sources, including multiple listing services (MLS) listings, foreclosure auctions and short sales. As of December 31, 2016, its SFR portfolio consisted of 31,684 owned homes, including 31,065 rental homes and 619 homes that it does not intend to hold for the long term.

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