Reviewing UMH Properties (UMH) & AvalonBay Communities (NYSE:AVB)

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

Profitability

This table compares AvalonBay Communities and UMH 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%
UMH Properties 1.05% 0.74% 0.16%

Institutional & Insider Ownership

96.9% of AvalonBay Communities shares are held by institutional investors. Comparatively, 52.9% of UMH Properties shares are held by institutional investors. 0.5% of AvalonBay Communities shares are held by company insiders. Comparatively, 11.6% of UMH Properties shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares AvalonBay Communities and UMH Properties’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
AvalonBay Communities $2.05 billion 12.66 $1.03 billion $6.40 29.30
UMH Properties $99.21 million 5.31 $11.53 million ($0.22) -68.50

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

Risk and Volatility

AvalonBay Communities has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500. Comparatively, UMH Properties has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Dividends

AvalonBay Communities pays an annual dividend of $5.68 per share and has a dividend yield of 3.0%. UMH Properties pays an annual dividend of $0.72 per share and has a dividend yield of 4.8%. 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. UMH Properties pays out -327.3% of its earnings in the form of a dividend. AvalonBay Communities has raised its dividend for 5 consecutive years. UMH Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and target prices for AvalonBay Communities and UMH Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AvalonBay Communities 1 8 8 0 2.41
UMH Properties 0 0 6 0 3.00

AvalonBay Communities presently has a consensus price target of $198.79, indicating a potential upside of 6.01%. UMH Properties has a consensus price target of $18.88, indicating a potential upside of 25.25%. Given UMH Properties’ stronger consensus rating and higher probable upside, analysts plainly believe UMH Properties is more favorable than AvalonBay Communities.

Summary

AvalonBay Communities beats UMH Properties on 11 of the 17 factors compared between the two stocks.

About AvalonBay Communities

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.

About UMH Properties

UMH Properties, Inc. (UMH) is a real estate investment trust (REIT). The Company’s primary business is the ownership and operation of manufactured home communities, including leasing manufactured home sites to private manufactured home owners. The Company also leases homes to residents, and through its taxable REIT subsidiary, UMH Sales and Finance, Inc. (S&F), conducts manufactured home sales in its communities. As of May 31, 2017, the Company owned 107 manufactured home communities consisting of approximately 19,400 developed sites. The communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana and Michigan. In connection with the operation of its communities, UMH also leases homes to prospective tenants. As of December 31, 2016, UMH owned a total of 4,700 rental homes, representing approximately 26% of its developed sites. These rental homes are owned by the Company and rented to residents.

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