PS Business Parks (NYSE:PSB) versus Apple Hospitality REIT (NYSE:APLE) Critical Analysis

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Apple Hospitality REIT (NYSE:APLE) and PS Business Parks (NYSE:PSB) are both mid-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, institutional ownership, earnings, risk and profitability.

Volatility and Risk

Apple Hospitality REIT has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500. Comparatively, PS Business Parks has a beta of 0.46, suggesting that its stock price is 54% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Apple Hospitality REIT and PS Business Parks, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Apple Hospitality REIT 0 1 2 0 2.67
PS Business Parks 1 0 0 0 1.00

Apple Hospitality REIT currently has a consensus target price of $18.33, indicating a potential upside of 12.20%. PS Business Parks has a consensus target price of $133.00, indicating a potential downside of 24.71%. Given Apple Hospitality REIT’s stronger consensus rating and higher probable upside, equities analysts clearly believe Apple Hospitality REIT is more favorable than PS Business Parks.

Dividends

Apple Hospitality REIT pays an annual dividend of $1.20 per share and has a dividend yield of 7.3%. PS Business Parks pays an annual dividend of $4.20 per share and has a dividend yield of 2.4%. Apple Hospitality REIT pays out 69.8% of its earnings in the form of a dividend. PS Business Parks pays out 64.9% 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. PS Business Parks has increased its dividend for 5 consecutive years.

Profitability

This table compares Apple Hospitality REIT and PS Business Parks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Apple Hospitality REIT 15.44% 5.75% 3.95%
PS Business Parks 35.70% 14.84% 7.33%

Earnings & Valuation

This table compares Apple Hospitality REIT and PS Business Parks’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Apple Hospitality REIT $1.27 billion 2.88 $206.09 million $1.72 9.50
PS Business Parks $413.52 million 11.72 $226.70 million $6.47 27.30

PS Business Parks has lower revenue, but higher earnings than Apple Hospitality REIT. Apple Hospitality REIT is trading at a lower price-to-earnings ratio than PS Business Parks, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

59.2% of Apple Hospitality REIT shares are held by institutional investors. Comparatively, 70.6% of PS Business Parks shares are held by institutional investors. 6.5% of Apple Hospitality REIT shares are held by company insiders. Comparatively, 1.5% of PS Business Parks shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

PS Business Parks beats Apple Hospitality REIT on 10 of the 17 factors compared between the two stocks.

About Apple Hospitality REIT

Apple Hospitality REIT, Inc. (NYSE: APLE) is a publicly traded real estate investment trust (REIT) that owns one of the largest and most diverse portfolios of upscale, select-service hotels in the United States. Apple Hospitality's portfolio consists of 241 hotels with more than 30,800 guest rooms located in 88 markets throughout 34 states. Franchised with industry-leading brands, the Company's portfolio comprises 114 Marriott-branded hotels and 126 Hilton-branded hotels.

About PS Business Parks

PS Business Parks, Inc., a member of the S&P SmallCap 600, is a REIT that acquires, develops, owns and operates commercial properties, primarily multi-tenant industrial, flex and office space. As of December 31, 2018, the Company wholly owned 28.2 million rentable square feet with approximately 5,050 commercial customers in six states and held a 95.0% interest in a 395-unit apartment complex.

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