Critical Analysis: SBA Communications (NASDAQ:SBAC) versus EastGroup Properties (NYSE:EGP)

SBA Communications (NASDAQ:SBAC) and EastGroup Properties (NYSE:EGP) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, earnings, risk, profitability, institutional ownership, dividends and valuation.

Analyst Ratings

This is a summary of current recommendations and price targets for SBA Communications and EastGroup Properties, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SBA Communications	0	3	15	1	2.89
EastGroup Properties	0	4	6	0	2.60

SBA Communications currently has a consensus target price of $301.22, indicating a potential upside of 40.04%. EastGroup Properties has a consensus target price of $185.60, indicating a potential upside of 4.77%. Given SBA Communications’ stronger consensus rating and higher possible upside, equities research analysts plainly believe SBA Communications is more favorable than EastGroup Properties.

Volatility and Risk

SBA Communications has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500. Comparatively, EastGroup Properties has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500.

Valuation & Earnings

This table compares SBA Communications and EastGroup Properties’ gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SBA Communications	$2.72 billion	8.58	$461.43 million	$4.65	46.26
EastGroup Properties	$487.02 million	16.51	$186.18 million	$3.75	47.24

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

Profitability

This table compares SBA Communications and EastGroup Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SBA Communications	18.71%	-9.68%	4.88%
EastGroup Properties	31.03%	8.04%	4.04%

Insider and Institutional Ownership

92.5% of SBA Communications shares are held by institutional investors. Comparatively, 90.7% of EastGroup Properties shares are held by institutional investors. 1.6% of SBA Communications shares are held by insiders. Comparatively, 1.5% of EastGroup Properties shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

SBA Communications pays an annual dividend of $3.40 per share and has a dividend yield of 1.6%. EastGroup Properties pays an annual dividend of $5.00 per share and has a dividend yield of 2.8%. SBA Communications pays out 73.1% of its earnings in the form of a dividend. EastGroup Properties pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SBA Communications has raised its dividend for 4 consecutive years and EastGroup Properties has raised its dividend for 12 consecutive years. EastGroup Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

SBA Communications beats EastGroup Properties on 11 of the 18 factors compared between the two stocks.

About SBA Communications

SBA Communications Corporation is a leading independent owner and operator of wireless communications infrastructure including towers, buildings, rooftops, distributed antenna systems (DAS) and small cells. With a portfolio of more than 39,000 communications sites in 16 markets throughout the Americas, Africa and the Philippines, SBA is listed on NASDAQ under the symbol SBAC. Our organization is part of the S&P 500 and is one of the top Real Estate Investment Trusts (REITs) by market capitalization.

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 57.6 million square feet.