Realty Income (O) & Armada Hoffler Properties (AHH) Head to Head Review

Armada Hoffler Properties (NYSE: AHH) and Realty Income (NYSE:O) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, dividends, institutional ownership, risk, earnings, profitability and analyst recommendations.

Risk and Volatility

Armada Hoffler Properties has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500. Comparatively, Realty Income has a beta of 0.29, indicating that its share price is 71% less volatile than the S&P 500.

Dividends

Armada Hoffler Properties pays an annual dividend of $0.76 per share and has a dividend yield of 5.0%. Realty Income pays an annual dividend of $2.54 per share and has a dividend yield of 4.6%. Armada Hoffler Properties pays out 152.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Realty Income pays out 208.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Armada Hoffler Properties has increased its dividend for 21 consecutive years and Realty Income has increased its dividend for 3 consecutive years. Armada Hoffler Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Armada Hoffler Properties and Realty Income’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Armada Hoffler Properties 7.78% 6.36% 2.47%
Realty Income 29.37% 5.11% 2.64%

Valuation and Earnings

This table compares Armada Hoffler Properties and Realty Income’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Armada Hoffler Properties $258.39 million 2.65 $28.07 million $0.50 30.46
Realty Income $1.10 billion 14.11 $315.57 million $1.22 45.26

Realty Income has higher revenue and earnings than Armada Hoffler Properties. Armada Hoffler Properties is trading at a lower price-to-earnings ratio than Realty Income, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations for Armada Hoffler Properties and Realty Income, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Armada Hoffler Properties 0 2 4 0 2.67
Realty Income 1 4 3 0 2.25

Armada Hoffler Properties currently has a consensus price target of $14.70, suggesting a potential downside of 3.48%. Realty Income has a consensus price target of $66.60, suggesting a potential upside of 20.61%. Given Realty Income’s higher probable upside, analysts plainly believe Realty Income is more favorable than Armada Hoffler Properties.

Institutional and Insider Ownership

82.1% of Armada Hoffler Properties shares are held by institutional investors. Comparatively, 70.0% of Realty Income shares are held by institutional investors. 16.6% of Armada Hoffler Properties shares are held by insiders. Comparatively, 0.3% of Realty Income shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Armada Hoffler Properties beats Realty Income on 9 of the 17 factors compared between the two stocks.

Armada Hoffler Properties Company Profile

Armada Hoffler Properties, Inc. is a real estate company. The Company is engaged in developing, building, owning and managing institutional-grade office, retail and multifamily properties in various markets throughout the Mid-Atlantic and Southeastern United States. In addition to the ownership of its operating property portfolio, the Company develops and builds properties for its own account and through joint ventures between the Company and unaffiliated partners. It also provides general contracting services to third parties. Its construction and development experience includes mid- and high-rise office buildings, retail strip malls and retail power centers, multifamily apartment communities, hotels and conference centers, single- and multi-tenant industrial, distribution and manufacturing facilities, educational, medical and special purpose facilities, government projects, parking garages and mixed-use town centers.

Realty Income Company Profile

Realty Income Corporation is a real estate investment trust (REIT). The Company is engaged in in-house acquisition, portfolio management, asset management, credit research, real estate research, legal, finance and accounting, information technology and capital markets capabilities. As of December 31, 2016, the Company owned a diversified portfolio of 4,944 properties located in 49 states and Puerto Rico, with over 83.0 million square feet of leasable space leased to 248 different commercial tenants doing business in 47 separate industries. As of December 31, 2016, of the 4,944 properties in the portfolio, 4,920, or 99.5%, were single-tenant properties, and the remaining were multi-tenant properties. As of December 31, 2016, of the 4,920 single-tenant properties, 4,836 were leased with a weighted average remaining lease term (excluding rights to extend a lease at the option of the tenant) of approximately 9.8 years.

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