Retail Properties of America (NYSE: RPAI) and Pennsylvania Real Estate Investment Trust (NYSE:PEI) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Institutional & Insider Ownership

78.9% of Retail Properties of America shares are held by institutional investors. Comparatively, 99.0% of Pennsylvania Real Estate Investment Trust shares are held by institutional investors. 0.4% of Retail Properties of America shares are held by insiders. Comparatively, 4.4% of Pennsylvania Real Estate Investment Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Retail Properties of America and Pennsylvania Real Estate Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Retail Properties of America 34.57% 9.20% 4.44%
Pennsylvania Real Estate Investment Trust -18.13% -9.06% -2.66%

Risk and Volatility

Retail Properties of America has a beta of 0.44, indicating that its share price is 56% less volatile than the S&P 500. Comparatively, Pennsylvania Real Estate Investment Trust has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500.

Earnings & Valuation

This table compares Retail Properties of America and Pennsylvania Real Estate Investment Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Retail Properties of America $565.53 million 5.44 $351.03 million $0.80 16.69
Pennsylvania Real Estate Investment Trust $392.34 million 1.98 $217.76 million ($1.31) -8.48

Retail Properties of America has higher revenue and earnings than Pennsylvania Real Estate Investment Trust. Pennsylvania Real Estate Investment Trust is trading at a lower price-to-earnings ratio than Retail Properties of America, indicating that it is currently the more affordable of the two stocks.

Dividends

Retail Properties of America pays an annual dividend of $0.66 per share and has a dividend yield of 4.9%. Pennsylvania Real Estate Investment Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.6%. Retail Properties of America pays out 82.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pennsylvania Real Estate Investment Trust pays out -64.1% of its earnings in the form of a dividend. Pennsylvania Real Estate Investment Trust has increased its dividend for 5 consecutive years. Pennsylvania Real Estate Investment Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Retail Properties of America and Pennsylvania Real Estate Investment Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Retail Properties of America 0 4 1 0 2.20
Pennsylvania Real Estate Investment Trust 1 6 0 0 1.86

Retail Properties of America presently has a consensus price target of $15.13, suggesting a potential upside of 13.30%. Pennsylvania Real Estate Investment Trust has a consensus price target of $14.08, suggesting a potential upside of 26.76%. Given Pennsylvania Real Estate Investment Trust’s higher possible upside, analysts clearly believe Pennsylvania Real Estate Investment Trust is more favorable than Retail Properties of America.

Summary

Retail Properties of America beats Pennsylvania Real Estate Investment Trust on 10 of the 17 factors compared between the two stocks.

About Retail Properties of America

Retail Properties of America, Inc. is a real estate investment trust (REIT). The Company owns and operates shopping centers located in the United States. As of December 31, 2016, it owned 156 retail operating properties representing 25,832,000 square feet of gross leasable area (GLA). Its retail operating portfolio includes neighborhood and community centers, power centers, and lifestyle centers and multi-tenant retail-focused mixed-use properties, as well as single-user retail properties. As of December 31, 2016, it had identified 10 target markets, including Dallas, Washington, District of Columbia/Baltimore, New York, Atlanta, Seattle, Chicago, Houston, San Antonio, Phoenix and Austin. Its properties include 23rd Street Plaza, Azalea Square I, Boulevard Plaza, Brown’s Lane, Cranberry Square, Denton Crossing, Dorman Center I & II, Edgemont Town Center, Edwards Multiplex, Green’s Corner, Home Depot Plaza, Lake Mary Pointe, Lincoln Park, University Town Center and Winchester Commons.

About Pennsylvania Real Estate Investment Trust

Pennsylvania Real Estate Investment Trust (PREIT) is a self-managed and self-administered real estate investment trust (REIT). The Company’s primary business is owning and operating retail shopping malls, which it does primarily through operating partnership, PREIT Associates, L.P. (PREIT Associates). The Company is engaged in the ownership, management, leasing, acquisition, redevelopment, development and disposition of shopping malls. The Company has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region. As of December 31, 2016, the Company owned interests in 30 retail properties, of which 26 are operating properties and four are development or redevelopment properties. As of December 31, 2016, the Company’s 26 operating properties included 22 shopping malls and four other retail properties, had a total of 21.7 million square feet and were located in nine states.

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