Sun Communities (NYSE: SUI) and American Campus Communities (NYSE:ACC) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Dividends

Sun Communities pays an annual dividend of $2.68 per share and has a dividend yield of 3.1%. American Campus Communities pays an annual dividend of $1.76 per share and has a dividend yield of 3.8%. Sun Communities pays out 382.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Campus Communities pays out 359.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Campus Communities has increased its dividend for 4 consecutive years. American Campus Communities is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Sun Communities and American Campus Communities’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sun Communities $936.86 million 7.35 $443.91 million $0.70 124.44
American Campus Communities $772.33 million 8.05 $379.78 million $0.49 94.31

Sun Communities has higher revenue and earnings than American Campus Communities. American Campus Communities is trading at a lower price-to-earnings ratio than Sun Communities, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings for Sun Communities and American Campus Communities, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sun Communities 0 2 3 0 2.60
American Campus Communities 0 4 5 0 2.56

Sun Communities currently has a consensus price target of $87.80, indicating a potential upside of 0.79%. American Campus Communities has a consensus price target of $52.50, indicating a potential upside of 13.61%. Given American Campus Communities’ higher probable upside, analysts plainly believe American Campus Communities is more favorable than Sun Communities.

Institutional & Insider Ownership

88.4% of Sun Communities shares are held by institutional investors. 4.2% of Sun Communities shares are held by insiders. Comparatively, 0.7% of American Campus Communities shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Sun Communities has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500. Comparatively, American Campus Communities has a beta of 0.25, indicating that its share price is 75% less volatile than the S&P 500.

Profitability

This table compares Sun Communities and American Campus Communities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sun Communities 6.82% 2.59% 1.07%
American Campus Communities 8.59% 1.90% 1.09%

Summary

Sun Communities beats American Campus Communities on 9 of the 17 factors compared between the two stocks.

Sun Communities Company Profile

Sun Communities, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company is a fully integrated real estate company, which, together with its affiliates and predecessors, has been in the business of acquiring, operating, developing, and expanding manufactured housing (MH) and recreational vehicle (RV). As of December 31, 2016, it owned and operated or had an interest in a portfolio of properties located throughout the United States and Ontario, Canada, including 226 MH communities, 87 RV communities, and 28 properties containing both MH and RV sites. The Company operates through two segments: Real Property Operations and Home Sales and Rentals. The Real Property Operations segment owns, operates, or has an interest in a portfolio, and develops MH communities and RV communities throughout the United States and is in the business of acquiring, operating, and expanding MH and RV communities.

American Campus Communities Company Profile

American Campus Communities, Inc. is a self-managed and self-administered equity real estate investment trust (REIT). The Company’s segments include Wholly-Owned Properties, On-Campus Participating Properties, Development Services, and Property Management Services. It is engaged in the acquisition, design, financing, development, construction management, leasing and management of student housing properties. The Wholly-Owned Properties segment consists of off-campus properties, which are located in close proximity to the school campus. The On-Campus Participating Properties segment includes on-campus properties that are operated under long-term ground/facility leases with three university systems. The Development Services segment consists of development and construction management services that it provides through one of its taxable REIT subsidiaries for third-party owners. The Property Management Services segment includes revenues generated from third-party management contracts.

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