UDR (NYSE: UDR) and AvalonBay Communities (NYSE:AVB) are both large-cap residential reits companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, dividends, earnings and risk.
Volatility and Risk
UDR has a beta of 0.39, indicating that its stock price is 61% less volatile than the S&P 500. Comparatively, AvalonBay Communities has a beta of 0.35, indicating that its stock price is 65% less volatile than the S&P 500.
UDR pays an annual dividend of $1.24 per share and has a dividend yield of 3.2%. AvalonBay Communities pays an annual dividend of $5.68 per share and has a dividend yield of 3.2%. UDR pays out 400.0% 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 pays out 89.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. UDR has raised its dividend for 7 consecutive years and AvalonBay Communities has raised its dividend for 5 consecutive years. UDR is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of current ratings and target prices for UDR and AvalonBay Communities, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
UDR currently has a consensus price target of $40.00, indicating a potential upside of 3.84%. AvalonBay Communities has a consensus price target of $201.07, indicating a potential upside of 12.70%. Given AvalonBay Communities’ stronger consensus rating and higher possible upside, analysts clearly believe AvalonBay Communities is more favorable than UDR.
This table compares UDR and AvalonBay Communities’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional & Insider Ownership
96.5% of UDR shares are held by institutional investors. Comparatively, 94.8% of AvalonBay Communities shares are held by institutional investors. 3.1% of UDR shares are held by company insiders. Comparatively, 0.5% of AvalonBay Communities 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 & Valuation
This table compares UDR and AvalonBay Communities’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|UDR||$959.86 million||10.75||$292.71 million||$0.31||124.26|
|AvalonBay Communities||$2.05 billion||12.05||$1.03 billion||$6.38||27.96|
AvalonBay Communities has higher revenue and earnings than UDR. AvalonBay Communities is trading at a lower price-to-earnings ratio than UDR, indicating that it is currently the more affordable of the two stocks.
AvalonBay Communities beats UDR on 10 of the 17 factors compared between the two stocks.
UDR, Inc. is a self-administered real estate investment trust. The Company owns, operates, acquires, renovates, develops, redevelops, disposes of and manages multifamily apartment communities generally located in various markets across the United States. The Company’s segments are Same-Store Communities and Non-Mature Communities/Other. As of December 31, 2016, the Company’s consolidated real estate portfolio included 127 communities located in 18 markets, with a total of 39,454 completed apartment homes. As of December 31, 2016, the Company also had an ownership interest in 27 communities containing 6,849 apartment homes through unconsolidated joint ventures or partnerships. As of December 31, 2016, the Company’s properties were in various locations, such as Orange County, San Francisco and Los Angeles in California; Seattle, Washington; Richmond, Virginia; Baltimore, Maryland; Orlando and Tampa in Florida; Nashville, Tennessee, and Dallas and Austin in Texas.
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.
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