Comparing Tanger Factory Outlet Centers (SKT) and Agree Realty (NYSE:ADC)

Agree Realty (NYSE: ADC) and Tanger Factory Outlet Centers (NYSE:SKT) are both financials companies, but which is the better business? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, risk, valuation, institutional ownership and dividends.

Profitability

This table compares Agree Realty and Tanger Factory Outlet Centers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Agree Realty 49.26% 7.27% 4.42%
Tanger Factory Outlet Centers 12.34% 8.98% 2.37%

Dividends

Agree Realty pays an annual dividend of $2.08 per share and has a dividend yield of 4.2%. Tanger Factory Outlet Centers pays an annual dividend of $1.37 per share and has a dividend yield of 5.5%. Agree Realty 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. Tanger Factory Outlet Centers pays out 221.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Agree Realty has increased its dividend for 5 consecutive years and Tanger Factory Outlet Centers has increased its dividend for 25 consecutive years. Tanger Factory Outlet Centers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Agree Realty and Tanger Factory Outlet Centers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Agree Realty 0 2 7 0 2.78
Tanger Factory Outlet Centers 1 4 1 0 2.00

Agree Realty currently has a consensus price target of $54.57, indicating a potential upside of 10.07%. Tanger Factory Outlet Centers has a consensus price target of $24.88, indicating a potential upside of 0.02%. Given Agree Realty’s stronger consensus rating and higher probable upside, research analysts clearly believe Agree Realty is more favorable than Tanger Factory Outlet Centers.

Earnings and Valuation

This table compares Agree Realty and Tanger Factory Outlet Centers’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Agree Realty $91.53 million 15.83 $45.11 million $2.05 24.19
Tanger Factory Outlet Centers $465.83 million 5.05 $193.74 million $0.62 40.11

Tanger Factory Outlet Centers has higher revenue and earnings than Agree Realty. Agree Realty is trading at a lower price-to-earnings ratio than Tanger Factory Outlet Centers, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Agree Realty has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Tanger Factory Outlet Centers has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500.

Insider and Institutional Ownership

87.2% of Agree Realty shares are held by institutional investors. Comparatively, 99.5% of Tanger Factory Outlet Centers shares are held by institutional investors. 4.4% of Agree Realty shares are held by company insiders. Comparatively, 4.8% of Tanger Factory Outlet Centers shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Agree Realty beats Tanger Factory Outlet Centers on 9 of the 17 factors compared between the two stocks.

About Agree Realty

Agree Realty Corporation (Agree Realty) is an integrated real estate investment trust (REIT) primarily focused on the ownership, acquisition, development and management of retail properties. The Company operates through Agree Limited Partnership (the Operating Partnership). As of December 31, 2016, its portfolio consisted of 366 properties located in 43 states and totaling approximately seven million square feet of gross leasable area (GLA). As of December 31, 2016, its portfolio included 363 net lease properties, which contributed approximately 98.1% of annualized base rent, and three community shopping centers. The Company’s business objective is to generate consistent shareholder returns by investing in and actively managing a diversified portfolio of retail properties net leased to industry tenants. Its community shopping centers include Capital Plaza, Frankfort; Central Michigan Commons, Mount Pleasant, and West Frankfort Plaza, West Frankfort.

About Tanger Factory Outlet Centers

Tanger Factory Outlet Centers, Inc. is an owner and operator of outlet centers in the United States and Canada. The Company is a fully-integrated, self-administered and self-managed real estate investment trust (REIT), which focuses on developing, acquiring, owning, operating and managing outlet shopping centers. As of December 31, 2016, its portfolio consisted of 36 outlet centers, with a total gross leasable area of approximately 12.7 million square feet, which were 98% occupied and contained over 2,600 stores representing approximately 400 store brands. Its outlet centers and other assets are held by, and all of its operations are conducted by, Tanger Properties Limited Partnership and subsidiaries (Operating Partnership). The Company owns the majority of the units of partnership interest issued by the Operating Partnership, through its subsidiaries, Tanger GP Trust and Tanger LP Trust. Tanger GP Trust controls the Operating Partnership as its sole general partner.

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