Alexandria Real Estate Equities (NYSE:ARE) and AvalonBay Communities (NYSE:AVB) are both large-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, valuation, risk, institutional ownership, earnings, analyst recommendations and dividends.
This is a breakdown of recent ratings and recommmendations for Alexandria Real Estate Equities and AvalonBay Communities, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alexandria Real Estate Equities||0||6||3||1||2.50|
Alexandria Real Estate Equities presently has a consensus target price of $109.56, suggesting a potential downside of 30.15%. AvalonBay Communities has a consensus target price of $223.79, suggesting a potential upside of 6.99%. Given AvalonBay Communities’ stronger consensus rating and higher probable upside, analysts clearly believe AvalonBay Communities is more favorable than Alexandria Real Estate Equities.
Institutional and Insider Ownership
98.7% of Alexandria Real Estate Equities shares are owned by institutional investors. Comparatively, 93.1% of AvalonBay Communities shares are owned by institutional investors. 1.4% of Alexandria Real Estate Equities shares are owned by company insiders. Comparatively, 0.4% of AvalonBay Communities shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Alexandria Real Estate Equities pays an annual dividend of $4.00 per share and has a dividend yield of 2.6%. AvalonBay Communities pays an annual dividend of $6.08 per share and has a dividend yield of 2.9%. Alexandria Real Estate Equities pays out 60.6% of its earnings in the form of a dividend. AvalonBay Communities pays out 67.6% 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. Alexandria Real Estate Equities has increased its dividend for 8 consecutive years and AvalonBay Communities has increased its dividend for 7 consecutive years.
This table compares Alexandria Real Estate Equities and AvalonBay Communities’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alexandria Real Estate Equities||9.29%||1.63%||0.86%|
Volatility & Risk
Alexandria Real Estate Equities has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, AvalonBay Communities has a beta of 0.45, meaning that its share price is 55% less volatile than the S&P 500.
Valuation and Earnings
This table compares Alexandria Real Estate Equities and AvalonBay Communities’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Alexandria Real Estate Equities||$1.33 billion||13.40||$379.31 million||$6.60||23.77|
|AvalonBay Communities||$2.28 billion||12.79||$974.53 million||$9.00||23.24|
AvalonBay Communities has higher revenue and earnings than Alexandria Real Estate Equities. AvalonBay Communities 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.
AvalonBay Communities beats Alexandria Real Estate Equities on 10 of the 18 factors compared between the two stocks.
Alexandria Real Estate Equities Company Profile
Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500<sup>®</sup> company, is an urban office real estate investment trust ("REIT") uniquely focused on collaborative life science and technology campuses in AAA innovation cluster locations, with a total market capitalization of $21.8 billion and an asset base in North America of 33.7 million square feet ("SF") as of March 31, 2019. The asset base in North America includes 23.2 million RSF of operating properties and 4.4 million RSF of new Class A properties currently undergoing construction or pre-construction, consisting of 2.1 million RSF of development and redevelopment projects under construction, and 2.3 million RSF undergoing pre-construction activities. Additionally, the asset base in North America includes 6.1 million SF of intermediate-term and future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science and technology campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science and technology companies through our venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.
AvalonBay Communities Company Profile
As of March 31, 2019, the Company owned or held a direct or indirect ownership interest in 291 apartment communities containing 85,313 apartment homes in 12 states and the District of Columbia, of which 19 communities were under development and nine communities were under redevelopment. The Company is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in leading metropolitan areas primarily in New England, the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific Northwest, and the Northern and Southern California regions of the United States.
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