Associated Estates Realty (NYSE: AEC) and ARMOUR Residential REIT (NYSE:ARR) are both small-cap financials companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, institutional ownership, risk, analyst recommendations and profitability.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Associated Estates Realty and ARMOUR Residential REIT, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Associated Estates Realty 0 0 0 0 N/A
ARMOUR Residential REIT 1 1 0 0 1.50

ARMOUR Residential REIT has a consensus price target of $23.00, suggesting a potential downside of 12.41%. Given ARMOUR Residential REIT’s higher probable upside, analysts plainly believe ARMOUR Residential REIT is more favorable than Associated Estates Realty.

Insider & Institutional Ownership

46.1% of ARMOUR Residential REIT shares are held by institutional investors. 1.5% of ARMOUR Residential REIT shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

ARMOUR Residential REIT pays an annual dividend of $2.28 per share and has a dividend yield of 8.7%. Associated Estates Realty does not pay a dividend. ARMOUR Residential REIT pays out 30.0% of its earnings in the form of a dividend. Associated Estates Realty has increased its dividend for 2 consecutive years and ARMOUR Residential REIT has increased its dividend for 5 consecutive years.

Profitability

This table compares Associated Estates Realty and ARMOUR Residential REIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Associated Estates Realty 60.04% 18.10% 7.71%
ARMOUR Residential REIT 114.11% 9.26% 1.31%

Earnings and Valuation

This table compares Associated Estates Realty and ARMOUR Residential REIT’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Associated Estates Realty N/A N/A N/A N/A N/A
ARMOUR Residential REIT $331.03 million 3.27 $313.42 million $7.60 3.46

ARMOUR Residential REIT has higher revenue and earnings than Associated Estates Realty.

Summary

ARMOUR Residential REIT beats Associated Estates Realty on 7 of the 10 factors compared between the two stocks.

About Associated Estates Realty

Associated Estates Realty Corporation is a self-administered and self-managed equity real estate investment trust (REIT). The Company is engaged primarily in the ownership and operation of multifamily apartment units. It specializes in multifamily ownership, operation, acquisition, development, disposition and property management activities. Its operating portfolio consists of approximately 49 apartment communities containing around 12,734 units in eight states that are owned, either directly or indirectly, through its subsidiaries. It also owns a commercial building in Los Angeles, California containing approximately 78,800 total square feet of office and commercial space. The Company also earns revenue from rental payments from the leasing of apartment units. It owns a taxable REIT subsidiary, which performs construction management services in connection with the development of multifamily properties that it owns, including consolidated and unconsolidated joint ventures.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. is a real estate investment trust. The Company invests in and manages a leveraged portfolio of mortgage-backed securities (MBS) and mortgage loans. The Company invests in residential mortgage backed securities issued or guaranteed by a United States Government-sponsored enterprise (GSE), such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or a government agency, such as the Government National Mortgage Association (collectively, Agency Securities). The Company also invests in Interest-Only Securities, which are the interest portions of Agency Securities that are separated and sold individually from the principal portion of the same payment. The Company raises funds for additional funding through equity offerings (including preferred equity), unsecured debt securities and convertible securities (including warrants, preferred equity and debt), among others. It is managed by ARMOUR Capital Management LP.

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