Head to Head Analysis: Colony Starwood Homes (SFR) & UMH Properties (NYSE:UMH)

Colony Starwood Homes (NYSE: SFR) and UMH Properties (NYSE:UMH) are both residential reits companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Profitability

This table compares Colony Starwood Homes and UMH Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Colony Starwood Homes -7.41% -1.07% -0.47%
UMH Properties 1.05% 0.74% 0.16%

Dividends

Colony Starwood Homes pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. UMH Properties pays an annual dividend of $0.72 per share and has a dividend yield of 4.8%. Colony Starwood Homes pays out -314.3% of its earnings in the form of a dividend. UMH Properties pays out -327.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. UMH Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Colony Starwood Homes and UMH Properties’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Colony Starwood Homes $575.68 million 8.28 -$81.26 million ($0.28) -132.61
UMH Properties $99.21 million 5.27 $11.53 million ($0.22) -68.09

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

Analyst Ratings

This is a summary of current ratings and target prices for Colony Starwood Homes and UMH Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Colony Starwood Homes 0 4 6 0 2.60
UMH Properties 0 0 6 0 3.00

Colony Starwood Homes presently has a consensus price target of $37.50, indicating a potential upside of 1.00%. UMH Properties has a consensus price target of $18.60, indicating a potential upside of 24.17%. Given UMH Properties’ stronger consensus rating and higher probable upside, analysts clearly believe UMH Properties is more favorable than Colony Starwood Homes.

Risk & Volatility

Colony Starwood Homes has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, UMH Properties has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500.

Institutional and Insider Ownership

54.9% of UMH Properties shares are owned by institutional investors. 5.0% of Colony Starwood Homes shares are owned by company insiders. Comparatively, 11.6% of UMH Properties shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

UMH Properties beats Colony Starwood Homes on 12 of the 15 factors compared between the two stocks.

Colony Starwood Homes Company Profile

Starwood Waypoint Homes, formerly Colony Starwood Homes, is an internally managed real estate investment trust (REIT). The Company was formed primarily to acquire, renovate, lease and manage residential assets in select markets across the United States. It is focused on acquiring single-family rental (SFR) homes through a variety of channels, renovating these homes to the extent necessary and leasing them to qualified residents. The Company operates through two segments, which are represented by its portfolio of SFR homes and its portfolio of NPLs owned in the joint venture with Prime Asset Fund VI, LLC (Prime). The Company identifies and pursues individual home acquisition opportunities through various sources, including multiple listing services (MLS) listings, foreclosure auctions and short sales. As of December 31, 2016, its SFR portfolio consisted of 31,684 owned homes, including 31,065 rental homes and 619 homes that it does not intend to hold for the long term.

UMH Properties Company Profile

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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