Critical Survey: American Homes 4 Rent (NYSE:AMH) & EastGroup Properties (NYSE:EGP)

American Homes 4 Rent (NYSE:AMHGet Rating) and EastGroup Properties (NYSE:EGPGet Rating) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, dividends, profitability, valuation, institutional ownership and earnings.

Dividends

American Homes 4 Rent pays an annual dividend of $0.72 per share and has a dividend yield of 2.1%. EastGroup Properties pays an annual dividend of $4.40 per share and has a dividend yield of 2.9%. American Homes 4 Rent pays out 126.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. EastGroup Properties pays out 85.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Homes 4 Rent has raised its dividend for 2 consecutive years and EastGroup Properties has raised its dividend for 10 consecutive years. EastGroup Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

American Homes 4 Rent has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, EastGroup Properties has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.

Institutional & Insider Ownership

88.5% of American Homes 4 Rent shares are held by institutional investors. Comparatively, 89.7% of EastGroup Properties shares are held by institutional investors. 6.0% of American Homes 4 Rent 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, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares American Homes 4 Rent and EastGroup Properties’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Homes 4 Rent $1.30 billion 9.09 $189.09 million $0.57 59.69
EastGroup Properties $409.48 million 16.17 $157.56 million $5.14 29.57

American Homes 4 Rent has higher revenue and earnings than EastGroup Properties. EastGroup Properties is trading at a lower price-to-earnings ratio than American Homes 4 Rent, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares American Homes 4 Rent and EastGroup Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Homes 4 Rent 15.67% 3.46% 2.11%
EastGroup Properties 47.89% 12.77% 6.34%

Analyst Recommendations

This is a summary of current ratings and target prices for American Homes 4 Rent and EastGroup Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Homes 4 Rent 0 5 8 1 2.71
EastGroup Properties 0 6 3 0 2.33

American Homes 4 Rent currently has a consensus target price of $42.07, suggesting a potential upside of 23.67%. EastGroup Properties has a consensus target price of $189.80, suggesting a potential upside of 24.88%. Given EastGroup Properties’ higher probable upside, analysts clearly believe EastGroup Properties is more favorable than American Homes 4 Rent.

Summary

EastGroup Properties beats American Homes 4 Rent on 11 of the 18 factors compared between the two stocks.

About American Homes 4 Rent

(Get Rating)

American Homes 4 Rent (NYSE: AMH) is a leader in the single-family home rental industry and "American Homes 4 Rent" is fast becoming a nationally recognized brand for rental homes, known for high-quality, good value and tenant satisfaction. We are an internally managed Maryland real estate investment trust, or REIT, focused on acquiring, developing, renovating, leasing, and operating attractive, single-family homes as rental properties. As of September 30, 2020, we owned 53,229 single-family properties in selected submarkets in 22 states.

About EastGroup Properties

(Get Rating)

EastGroup Properties, Inc. (NYSE: EGP), an S&P MidCap 400 company, 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 15,000 to 70,000 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. EastGroup's portfolio, including development projects and value-add acquisitions in lease-up and under construction, currently includes approximately 45.8 million square feet.

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