Analyzing Saul Centers (BFS) and Retail Properties of America (RPAI)

Saul Centers (NYSE: BFS) and Retail Properties of America (NYSE:RPAI) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.

Valuation and Earnings

This table compares Saul Centers and Retail Properties of America’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Saul Centers $217.07 million 6.18 $45.27 million $1.63 37.57
Retail Properties of America $583.14 million 5.12 $166.81 million $0.65 19.88

Retail Properties of America has higher revenue and earnings than Saul Centers. Retail Properties of America is trading at a lower price-to-earnings ratio than Saul Centers, indicating that it is currently the more affordable of the two stocks.

Dividends

Saul Centers pays an annual dividend of $2.04 per share and has a dividend yield of 3.3%. Retail Properties of America pays an annual dividend of $0.66 per share and has a dividend yield of 5.1%. Saul Centers pays out 125.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Retail Properties of America pays out 101.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Retail Properties of America has raised its dividend for 3 consecutive years. Retail Properties of America is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

44.9% of Saul Centers shares are held by institutional investors. Comparatively, 78.8% of Retail Properties of America shares are held by institutional investors. 48.8% of Saul Centers shares are held by company insiders. Comparatively, 0.4% of Retail Properties of America shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Saul Centers and Retail Properties of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Saul Centers 21.42% 23.93% 3.44%
Retail Properties of America 28.84% 7.61% 3.71%

Analyst Recommendations

This is a summary of recent recommendations for Saul Centers and Retail Properties of America, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Saul Centers 0 0 1 0 3.00
Retail Properties of America 0 4 3 0 2.43

Retail Properties of America has a consensus target price of $16.17, suggesting a potential upside of 25.13%. Given Retail Properties of America’s higher probable upside, analysts plainly believe Retail Properties of America is more favorable than Saul Centers.

Risk & Volatility

Saul Centers has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500. Comparatively, Retail Properties of America has a beta of 0.48, suggesting that its share price is 52% less volatile than the S&P 500.

Summary

Retail Properties of America beats Saul Centers on 10 of the 17 factors compared between the two stocks.

Saul Centers Company Profile

Saul Centers, Inc. operates as a real estate investment trust. The Company’s principal business activity is the ownership, management and development of income-producing properties. It operates through two segments: Shopping Centers and Mixed-Use Properties. The Company, which conducts all of its activities through its subsidiaries, the Saul Holdings Limited Partnership (Operating Partnership) and Subsidiary Partnerships, engages in the ownership, operation, management, leasing, acquisition, renovation, expansion, development and financing of community and neighborhood shopping centers and mixed-used properties in the Washington, District of Columbia/Baltimore metropolitan area. As of December 31, 2016, it properties (the Current Portfolio Properties) consisted of 49 shopping center properties (the Shopping Centers), six mixed-use properties, which consists of office, retail and multi-family residential uses (the Mixed-Use Properties) and three (non-operating) development properties.

Retail Properties of America Company Profile

Retail Properties of America, Inc. is a real estate investment trust (REIT). The Company owns and operates shopping centers located in the United States. As of December 31, 2016, it owned 156 retail operating properties representing 25,832,000 square feet of gross leasable area (GLA). Its retail operating portfolio includes neighborhood and community centers, power centers, and lifestyle centers and multi-tenant retail-focused mixed-use properties, as well as single-user retail properties. As of December 31, 2016, it had identified 10 target markets, including Dallas, Washington, District of Columbia/Baltimore, New York, Atlanta, Seattle, Chicago, Houston, San Antonio, Phoenix and Austin. Its properties include 23rd Street Plaza, Azalea Square I, Boulevard Plaza, Brown’s Lane, Cranberry Square, Denton Crossing, Dorman Center I & II, Edgemont Town Center, Edwards Multiplex, Green’s Corner, Home Depot Plaza, Lake Mary Pointe, Lincoln Park, University Town Center and Winchester Commons.

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