Douglas Emmett (DEI) and Alexandria Real Estate Equities (ARE) Critical Review

Douglas Emmett (NYSE: DEI) and Alexandria Real Estate Equities (NYSE:ARE) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Douglas Emmett and Alexandria Real Estate Equities, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Douglas Emmett 2 7 1 0 1.90
Alexandria Real Estate Equities 0 0 3 0 3.00

Douglas Emmett presently has a consensus target price of $39.71, indicating a potential upside of 2.15%. Alexandria Real Estate Equities has a consensus target price of $126.00, indicating a potential upside of 6.73%. Given Alexandria Real Estate Equities’ stronger consensus rating and higher probable upside, analysts clearly believe Alexandria Real Estate Equities is more favorable than Douglas Emmett.

Risk and Volatility

Douglas Emmett has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500. Comparatively, Alexandria Real Estate Equities has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Earnings and Valuation

This table compares Douglas Emmett and Alexandria Real Estate Equities’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Douglas Emmett $788.75 million 8.03 $481.47 million $0.59 65.90
Alexandria Real Estate Equities $1.02 billion 10.84 $639.55 million $0.40 295.16

Alexandria Real Estate Equities has higher revenue and earnings than Douglas Emmett. Douglas Emmett is trading at a lower price-to-earnings ratio than Alexandria Real Estate Equities, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

96.1% of Douglas Emmett shares are held by institutional investors. 17.8% of Douglas Emmett shares are held by insiders. Comparatively, 1.5% of Alexandria Real Estate Equities shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Douglas Emmett pays an annual dividend of $0.92 per share and has a dividend yield of 2.4%. Alexandria Real Estate Equities pays an annual dividend of $3.44 per share and has a dividend yield of 2.9%. Douglas Emmett pays out 155.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Alexandria Real Estate Equities pays out 860.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Douglas Emmett has increased its dividend for 6 consecutive years and Alexandria Real Estate Equities has increased its dividend for 6 consecutive years.

Profitability

This table compares Douglas Emmett and Alexandria Real Estate Equities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Douglas Emmett 12.00% 2.95% 1.18%
Alexandria Real Estate Equities 9.45% 3.11% 1.49%

Summary

Alexandria Real Estate Equities beats Douglas Emmett on 10 of the 16 factors compared between the two stocks.

About Douglas Emmett

Douglas Emmett, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company is owner and operator of office and multifamily properties located in submarkets in Los Angeles and Honolulu. The Company operates through two segments: the acquisition, development, ownership and management of office real estate (Office Segment), and the acquisition, development, ownership and management of multifamily real estate (Multifamily Segment). The services for its Office segment include primarily rental of office space and other tenant services, including parking and storage space rental. The services for its Multifamily segment include primarily rental of apartments and other tenant services, including parking and storage space rental. It focuses on owning, acquiring developing and managing a substantial share of office properties and multifamily communities in neighborhoods.

About Alexandria Real Estate Equities

Alexandria Real Estate Equities, Inc. is a real estate investment (REIT). The Company is engaged in the business of providing space for lease to the life science and technology industries. It focuses on collaborative life science and technology campuses. It develops urban cluster campuses and ecosystems. As of December 31, 2016, the Company had 199 properties in North America. As of December 31, 2016, its asset base in North America consisted of 25.2 million square feet, including 19.9 million rentable square feet/foot (RSF) of operating properties, and development and redevelopment of under construction or pre-construction, as well as 5.3 million square feet of future ground-up development projects. Its properties are located in various areas, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland and Research Triangle Park. Its properties include Alexandria Technology Square, Alexandria Park at 128 and Alexandria Technology Center-Gateway.

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