Critical Review: Seritage Growth Properties (NYSE:SRG) vs. Alexander’s (NYSE:ALX)

Alexander’s (NYSE:ALX) and Seritage Growth Properties (NYSE:SRG) are both small-cap real estate companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitability, risk, analyst recommendations, dividends, earnings and institutional ownership.

Volatility and Risk

Alexander’s has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, Seritage Growth Properties has a beta of 2.19, meaning that its stock price is 119% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Alexander’s and Seritage Growth Properties, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alexander’s	1	0	1	1	2.67
Seritage Growth Properties	1	0	0	0	1.00

Alexander’s presently has a consensus target price of $212.00, indicating a potential downside of 14.91%. Given Alexander’s’ stronger consensus rating and higher possible upside, research analysts clearly believe Alexander’s is more favorable than Seritage Growth Properties.

Dividends

Alexander’s pays an annual dividend of $18.00 per share and has a dividend yield of 7.2%. Seritage Growth Properties pays an annual dividend of $1.00 per share and has a dividend yield of 53.3%. Alexander’s pays out 54.5% of its earnings in the form of a dividend. Seritage Growth Properties pays out -96.2% 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. Alexander’s has raised its dividend for 1 consecutive years. Seritage Growth Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

32.0% of Alexander’s shares are held by institutional investors. Comparatively, 78.9% of Seritage Growth Properties shares are held by institutional investors. 26.4% of Alexander’s shares are held by company insiders. Comparatively, 0.2% of Seritage Growth Properties shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Alexander’s and Seritage Growth Properties”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alexander’s	$213.18 million	5.97	$28.22 million	$33.05	7.54
Seritage Growth Properties	$12.88 million	8.20	-$68.21 million	($1.04)	-1.80

Alexander’s has higher revenue and earnings than Seritage Growth Properties. Seritage Growth Properties is trading at a lower price-to-earnings ratio than Alexander’s, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Alexander’s and Seritage Growth Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alexander’s	79.06%	123.09%	14.43%
Seritage Growth Properties	-419.02%	-17.06%	-12.94%

Summary

Alexander’s beats Seritage Growth Properties on 13 of the 18 factors compared between the two stocks.

About Alexander’s

Alexander’s, Inc. (NYSE: ALX) is a real estate investment trust (REIT), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties. All references to we, us, our, Company and Alexander’s refer to Alexander’s, Inc. and its consolidated subsidiaries. We are managed by, and our properties are leased and developed by, Vornado Realty Trust (Vornado) (NYSE: VNO). We have five properties in New York City.

About Seritage Growth Properties

Seritage Growth Properties operates as a real estate investment trust. The firm engages in the acquisition, ownership, development, redevelopment, management, and leasing of retail properties throughout the United States. Its property portfolio includes mall, shopping centers and freestanding locations. The company was founded on June 3, 2015 and is headquartered in New York, NY.