Mid-America Apartment Communities (NYSE:MAA) and AvalonBay Communities (NYSE:AVB) are both large-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, dividends, earnings, profitability, valuation, institutional ownership and analyst recommendations.
Dividends
Mid-America Apartment Communities pays an annual dividend of $4.00 per share and has a dividend yield of 3.0%. AvalonBay Communities pays an annual dividend of $6.36 per share and has a dividend yield of 3.9%. Mid-America Apartment Communities pays out 61.1% of its earnings in the form of a dividend. AvalonBay Communities pays out 68.1% 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. Mid-America Apartment Communities has raised its dividend for 1 consecutive years and AvalonBay Communities has raised its dividend for 9 consecutive years. AvalonBay Communities is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares Mid-America Apartment Communities and AvalonBay Communities' gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Mid-America Apartment Communities | $1.64 billion | 9.20 | $353.81 million | $6.55 | 20.15 |
| AvalonBay Communities | $2.32 billion | 9.85 | $785.97 million | $9.34 | 17.56 |
AvalonBay Communities has higher revenue and earnings than Mid-America Apartment Communities. AvalonBay Communities is trading at a lower price-to-earnings ratio than Mid-America Apartment Communities, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
91.4% of Mid-America Apartment Communities shares are held by institutional investors. Comparatively, 91.0% of AvalonBay Communities shares are held by institutional investors. 1.3% of Mid-America Apartment Communities shares are held by company insiders. Comparatively, 0.3% of AvalonBay Communities shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for Mid-America Apartment Communities and AvalonBay Communities, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Mid-America Apartment Communities | 0 | 3 | 3 | 0 | 2.50 |
| AvalonBay Communities | 1 | 7 | 4 | 0 | 2.25 |
Mid-America Apartment Communities currently has a consensus price target of $127.2222, suggesting a potential downside of 3.63%. AvalonBay Communities has a consensus price target of $172.2667, suggesting a potential upside of 5.04%. Given AvalonBay Communities' higher possible upside, analysts clearly believe AvalonBay Communities is more favorable than Mid-America Apartment Communities.
Profitability
This table compares Mid-America Apartment Communities and AvalonBay Communities' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Mid-America Apartment Communities | 19.22% | 5.63% | 3.13% |
| AvalonBay Communities | 27.97% | 6.02% | 3.38% |
Volatility and Risk
Mid-America Apartment Communities has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500. Comparatively, AvalonBay Communities has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500.
Summary
AvalonBay Communities beats Mid-America Apartment Communities on 12 of the 17 factors compared between the two stocks.
