Critical Analysis: Clipper Realty (NYSE:CLPR) versus EastGroup Properties (NYSE:EGP)

EastGroup Properties (NYSE:EGP) and Clipper Realty (NYSE:CLPR) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, dividends, earnings and risk.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for EastGroup Properties and Clipper Realty, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
EastGroup Properties	0	9	4	0	2.31
Clipper Realty	1	1	1	0	2.00

EastGroup Properties currently has a consensus target price of $189.00, indicating a potential upside of 21.42%. Clipper Realty has a consensus target price of $9.50, indicating a potential upside of 139.29%. Given Clipper Realty’s higher probable upside, analysts clearly believe Clipper Realty is more favorable than EastGroup Properties.

Profitability

This table compares EastGroup Properties and Clipper Realty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
EastGroup Properties	36.36%	8.93%	4.92%
Clipper Realty	-4.27%	-35.33%	-0.48%

Volatility & Risk

EastGroup Properties has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500. Comparatively, Clipper Realty has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500.

Insider and Institutional Ownership

92.1% of EastGroup Properties shares are held by institutional investors. Comparatively, 37.6% of Clipper Realty shares are held by institutional investors. 1.0% of EastGroup Properties shares are held by company insiders. Comparatively, 52.3% of Clipper Realty shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares EastGroup Properties and Clipper Realty’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
EastGroup Properties	$570.59 million	13.10	$200.49 million	$4.61	33.77
Clipper Realty	$138.21 million	0.46	-$5.90 million	($0.45)	-8.82

EastGroup Properties has higher revenue and earnings than Clipper Realty. Clipper Realty is trading at a lower price-to-earnings ratio than EastGroup Properties, indicating that it is currently the more affordable of the two stocks.

Dividends

EastGroup Properties pays an annual dividend of $5.08 per share and has a dividend yield of 3.3%. Clipper Realty pays an annual dividend of $0.38 per share and has a dividend yield of 9.6%. EastGroup Properties pays out 110.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Clipper Realty pays out -84.4% of its earnings in the form of a dividend. EastGroup Properties has increased its dividend for 12 consecutive years. Clipper Realty is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

EastGroup Properties beats Clipper Realty on 12 of the 17 factors compared between the two stocks.

About EastGroup Properties

EastGroup Properties, Inc. (NYSE: EGP), a member of the S&P Mid-Cap 400 and Russell 1000 Indexes, is a self-administered equity real estate investment trust focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina. The Company's goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality business distribution space for location sensitive customers (primarily in the 20,000 to 100,000 square foot range). The Company's strategy for growth is based on ownership of premier distribution facilities generally clustered near major transportation features in supply-constrained submarkets. The Company's portfolio, including development projects and value-add acquisitions in lease-up and under construction, currently includes approximately 59 million square feet.

About Clipper Realty

Clipper Realty Inc. (NYSE: CLPR) is a self-administered and self-managed real estate company that acquires, owns, manages, operates, and repositions multifamily residential and commercial properties in the New York metropolitan area, with a portfolio in Manhattan and Brooklyn.