Critical Comparison: Alexandria Real Estate Equities (NYSE:ARE) and Armada Hoffler Properties (AHH)

Armada Hoffler Properties (NYSE: AHH) and Alexandria Real Estate Equities (NYSE:ARE) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Valuation & Earnings

This table compares Armada Hoffler Properties and Alexandria Real Estate Equities’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Armada Hoffler Properties $315.03 million 2.71 $65.61 million $0.48 28.31
Alexandria Real Estate Equities $1.02 billion 11.01 $639.55 million $0.40 300.01

Alexandria Real Estate Equities has higher revenue and earnings than Armada Hoffler Properties. Armada Hoffler Properties is trading at a lower price-to-earnings ratio than Alexandria Real Estate Equities, indicating that it is currently the more affordable of the two stocks.

Dividends

Armada Hoffler Properties pays an annual dividend of $0.76 per share and has a dividend yield of 5.6%. Alexandria Real Estate Equities pays an annual dividend of $3.44 per share and has a dividend yield of 2.9%. Armada Hoffler Properties pays out 158.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Alexandria Real Estate Equities pays out 860.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Armada Hoffler Properties has increased its dividend for 6 consecutive years and Alexandria Real Estate Equities has increased its dividend for 3 consecutive years. Armada Hoffler Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current recommendations for Armada Hoffler Properties and Alexandria Real Estate Equities, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Armada Hoffler Properties 0 2 4 0 2.67
Alexandria Real Estate Equities 0 0 3 0 3.00

Armada Hoffler Properties presently has a consensus price target of $14.75, suggesting a potential upside of 8.54%. Alexandria Real Estate Equities has a consensus price target of $126.00, suggesting a potential upside of 5.00%. Given Armada Hoffler Properties’ higher possible upside, research analysts plainly believe Armada Hoffler Properties is more favorable than Alexandria Real Estate Equities.

Risk and Volatility

Armada Hoffler Properties has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500. Comparatively, Alexandria Real Estate Equities has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Institutional and Insider Ownership

81.4% of Armada Hoffler Properties shares are owned by institutional investors. 20.9% of Armada Hoffler Properties shares are owned by company insiders. Comparatively, 1.5% of Alexandria Real Estate Equities shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Armada Hoffler Properties and Alexandria Real Estate Equities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Armada Hoffler Properties 8.04% 7.02% 2.58%
Alexandria Real Estate Equities 9.45% 3.11% 1.49%

Summary

Armada Hoffler Properties beats Alexandria Real Estate Equities on 10 of the 17 factors compared between the two stocks.

Armada Hoffler Properties Company Profile

Armada Hoffler Properties, Inc. is a real estate company. The Company is engaged in developing, building, owning and managing institutional-grade office, retail and multifamily properties in various markets throughout the Mid-Atlantic and Southeastern United States. In addition to the ownership of its operating property portfolio, the Company develops and builds properties for its own account and through joint ventures between the Company and unaffiliated partners. It also provides general contracting services to third parties. Its construction and development experience includes mid- and high-rise office buildings, retail strip malls and retail power centers, multifamily apartment communities, hotels and conference centers, single- and multi-tenant industrial, distribution and manufacturing facilities, educational, medical and special purpose facilities, government projects, parking garages and mixed-use town centers.

Alexandria Real Estate Equities Company Profile

Alexandria Real Estate Equities, Inc. is a real estate investment (REIT). The Company is engaged in the business of providing space for lease to the life science and technology industries. It focuses on collaborative life science and technology campuses. It develops urban cluster campuses and ecosystems. As of December 31, 2016, the Company had 199 properties in North America. As of December 31, 2016, its asset base in North America consisted of 25.2 million square feet, including 19.9 million rentable square feet/foot (RSF) of operating properties, and development and redevelopment of under construction or pre-construction, as well as 5.3 million square feet of future ground-up development projects. Its properties are located in various areas, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland and Research Triangle Park. Its properties include Alexandria Technology Square, Alexandria Park at 128 and Alexandria Technology Center-Gateway.




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