AvalonBay Communities (NYSE: AVB) and Equity Lifestyle Properties (NYSE:ELS) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Profitability

This table compares AvalonBay Communities and Equity Lifestyle Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AvalonBay Communities 41.55% 8.66% 4.94%
Equity Lifestyle Properties 22.52% 21.07% 5.87%

Valuation and Earnings

This table compares AvalonBay Communities and Equity Lifestyle Properties’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
AvalonBay Communities $2.05 billion 12.64 $1.03 billion $6.40 29.24
Equity Lifestyle Properties $870.43 million 9.02 $173.26 million $2.09 42.78

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

Institutional and Insider Ownership

96.9% of AvalonBay Communities shares are held by institutional investors. Comparatively, 95.9% of Equity Lifestyle Properties shares are held by institutional investors. 0.5% of AvalonBay Communities shares are held by insiders. Comparatively, 6.1% of Equity Lifestyle Properties 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.

Volatility and Risk

AvalonBay Communities has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500. Comparatively, Equity Lifestyle Properties has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for AvalonBay Communities and Equity Lifestyle Properties, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AvalonBay Communities 1 8 8 0 2.41
Equity Lifestyle Properties 1 4 0 0 1.80

AvalonBay Communities currently has a consensus price target of $198.79, suggesting a potential upside of 6.21%. Equity Lifestyle Properties has a consensus price target of $86.00, suggesting a potential downside of 3.82%. Given AvalonBay Communities’ stronger consensus rating and higher probable upside, equities analysts plainly believe AvalonBay Communities is more favorable than Equity Lifestyle Properties.

Dividends

AvalonBay Communities pays an annual dividend of $5.68 per share and has a dividend yield of 3.0%. Equity Lifestyle Properties pays an annual dividend of $1.95 per share and has a dividend yield of 2.2%. AvalonBay Communities pays out 88.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Equity Lifestyle Properties pays out 93.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AvalonBay Communities has raised its dividend for 6 consecutive years and Equity Lifestyle Properties has raised its dividend for 5 consecutive years. AvalonBay Communities is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

AvalonBay Communities beats Equity Lifestyle Properties on 13 of the 17 factors compared between the two stocks.

AvalonBay Communities Company Profile

AvalonBay Communities, Inc. is a real estate investment trust (REIT). The Company is focused on the development, redevelopment, acquisition, ownership and operation of multifamily communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California. Its segments include Established Communities, Other Stabilized Communities and Development/Redevelopment Communities. As of June 30, 2017, the Company owned or held a direct or indirect ownership interest in 287 apartment communities containing 83,123 apartment homes in 10 states and the District of Columbia, of which 23 communities were under development and nine communities were under redevelopment. It operates its apartment communities under three core brands: Avalon, AVA and Eaves by Avalon. Its real estate investments consist of operating apartment communities, communities in various stages of development (Development Communities) and Development Rights.

Equity Lifestyle Properties Company Profile

Equity LifeStyle Properties, Inc. is a real estate investment trust (REIT). The Company is an owner and operator of lifestyle-oriented properties (properties) consisting primarily of manufactured home (MH) communities and recreational vehicle (RV) resorts and campgrounds. The Company operates through two segments: Property Operations and Home Sales and Rentals Operations. The Property Operations segment owns and operates land lease properties and the Home Sales and Rentals Operations segment purchases, sells and leases homes at the properties. It leases individual developed areas (sites) with access to utilities for placement of factory built homes, cottages, cabins or RVs. As of December 31, 2016, the Company’s property portfolio included 391 properties consisted of 146,610 residential sites. Its properties are designed for home options of various sizes and designs that are produced off-site by third-party manufacturers, installed and set on designated sites within the properties.

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