Analyzing Pebblebrook Hotel Trust (NYSE:PEB) & AvalonBay Communities (NYSE:AVB)

AvalonBay Communities (NYSE:AVB) and Pebblebrook Hotel Trust (NYSE:PEB) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, risk, profitability, valuation, dividends, institutional ownership and analyst recommendations.

Dividends

AvalonBay Communities pays an annual dividend of $6.80 per share and has a dividend yield of 3.1%. Pebblebrook Hotel Trust pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. AvalonBay Communities pays out 93.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pebblebrook Hotel Trust pays out -13.8% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares AvalonBay Communities and Pebblebrook Hotel Trust”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AvalonBay Communities	$2.88 billion	10.83	$928.83 million	$7.31	29.98
Pebblebrook Hotel Trust	$1.45 billion	1.11	-$78.02 million	($0.29)	-46.38

AvalonBay Communities has higher revenue and earnings than Pebblebrook Hotel Trust. Pebblebrook Hotel Trust is trading at a lower price-to-earnings ratio than AvalonBay Communities, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares AvalonBay Communities and Pebblebrook Hotel Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AvalonBay Communities	36.20%	8.84%	4.98%
Pebblebrook Hotel Trust	0.25%	0.13%	0.06%

Insider and Institutional Ownership

92.6% of AvalonBay Communities shares are owned by institutional investors. 0.4% of AvalonBay Communities shares are owned by company insiders. Comparatively, 2.4% of Pebblebrook Hotel Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for AvalonBay Communities and Pebblebrook Hotel Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AvalonBay Communities	0	10	7	0	2.41
Pebblebrook Hotel Trust	2	3	2	0	2.00

AvalonBay Communities presently has a consensus price target of $231.33, indicating a potential upside of 5.55%. Pebblebrook Hotel Trust has a consensus price target of $14.64, indicating a potential upside of 8.87%. Given Pebblebrook Hotel Trust’s higher probable upside, analysts plainly believe Pebblebrook Hotel Trust is more favorable than AvalonBay Communities.

Volatility & Risk

AvalonBay Communities has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Pebblebrook Hotel Trust has a beta of 1.86, indicating that its stock price is 86% more volatile than the S&P 500.

Summary

AvalonBay Communities beats Pebblebrook Hotel Trust on 12 of the 16 factors compared between the two stocks.

About AvalonBay Communities

As of December 31, 2023, the Company owned or held a direct or indirect ownership interest in 299 apartment communities containing 90,669 apartment homes in 12 states and the District of Columbia, of which 18 communities were under development. The Company is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in leading metropolitan areas in New England, the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in the Company's expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado.

About Pebblebrook Hotel Trust

Pebblebrook Hotel Trust (NYSE: PEB) is a publicly traded real estate investment trust ("REIT") and the largest owner of urban and resort lifestyle hotels and resorts in the United States. The Company owns 47 hotels and resorts, totaling approximately 12,200 guest rooms across 13 urban and resort markets.