Critical Survey: Preferred Apartment Communities (APTS) vs. Its Peers

Preferred Apartment Communities (NYSE: APTS) is one of 42 public companies in the “Residential REITs” industry, but how does it compare to its competitors? We will compare Preferred Apartment Communities to similar companies based on the strength of its risk, profitability, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Dividends

Preferred Apartment Communities pays an annual dividend of $0.94 per share and has a dividend yield of 4.5%. Preferred Apartment Communities pays out -93.1% of its earnings in the form of a dividend. As a group, “Residential REITs” companies pay a dividend yield of 3.5% and pay out 149.9% of their earnings in the form of a dividend. Preferred Apartment Communities is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent recommendations for Preferred Apartment Communities and its competitors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Preferred Apartment Communities 0 2 2 0 2.50
Preferred Apartment Communities Competitors 187 1233 1259 32 2.42

Preferred Apartment Communities presently has a consensus target price of $19.75, indicating a potential downside of 6.00%. As a group, “Residential REITs” companies have a potential upside of 8.23%. Given Preferred Apartment Communities’ competitors higher possible upside, analysts clearly believe Preferred Apartment Communities has less favorable growth aspects than its competitors.

Institutional and Insider Ownership

52.5% of Preferred Apartment Communities shares are held by institutional investors. Comparatively, 74.3% of shares of all “Residential REITs” companies are held by institutional investors. 3.1% of Preferred Apartment Communities shares are held by company insiders. Comparatively, 10.1% of shares of all “Residential REITs” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Preferred Apartment Communities has a beta of 0.43, suggesting that its share price is 57% less volatile than the S&P 500. Comparatively, Preferred Apartment Communities’ competitors have a beta of 0.51, suggesting that their average share price is 49% less volatile than the S&P 500.

Profitability

This table compares Preferred Apartment Communities and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Preferred Apartment Communities 10.49% 2.78% 1.08%
Preferred Apartment Communities Competitors 20.27% 3.92% 1.56%

Earnings and Valuation

This table compares Preferred Apartment Communities and its competitors revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Preferred Apartment Communities $200.12 million -$9.53 million -20.80
Preferred Apartment Communities Competitors $673.41 million $325.74 million 16.68

Preferred Apartment Communities’ competitors have higher revenue and earnings than Preferred Apartment Communities. Preferred Apartment Communities is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Summary

Preferred Apartment Communities competitors beat Preferred Apartment Communities on 11 of the 15 factors compared.

Preferred Apartment Communities Company Profile

Preferred Apartment Communities, Inc. is a real estate investment trust (REIT). The Company is formed to acquire and operate multifamily properties in select targeted markets throughout the United States. It operates through segments, including multifamily communities, real estate related financing, new market properties and office buildings. The multifamily communities segment consists of its portfolio of owned residential multifamily communities. The real estate related financing segment consists of the Company’s portfolio of real estate loans, bridge loans, and other instruments deployed by it to partially finance the development, construction, and prestabilization carrying costs of new multifamily communities and other real estate and real estate related assets. The new market properties segment consists of its portfolio of grocery-anchored shopping centers. The office buildings segment consists of its office buildings located in Atlanta, Georgia and Birmingham, Alabama and Texas.

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