Pennsylvania Real Estate Investment Trust (PEI) and Simon Property Group (SPG) Financial Survey

Pennsylvania Real Estate Investment Trust (NYSE: PEI) and Simon Property Group (NYSE:SPG) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, risk, earnings, analyst recommendations, dividends and valuation.

Earnings and Valuation

This table compares Pennsylvania Real Estate Investment Trust and Simon Property Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pennsylvania Real Estate Investment Trust $399.95 million 2.05 -$11.34 million ($1.24) -9.44
Simon Property Group $5.44 billion 19.48 $1.84 billion $5.67 29.19

Simon Property Group 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 Simon Property Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Pennsylvania Real Estate Investment Trust and Simon Property Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pennsylvania Real Estate Investment Trust -16.35% -7.60% -2.34%
Simon Property Group 31.96% 41.85% 6.09%

Insider & Institutional Ownership

97.7% of Pennsylvania Real Estate Investment Trust shares are owned by institutional investors. Comparatively, 47.4% of Simon Property Group shares are owned by institutional investors. 4.4% of Pennsylvania Real Estate Investment Trust shares are owned by company insiders. Comparatively, 8.4% of Simon Property Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Pennsylvania Real Estate Investment Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.2%. Simon Property Group pays an annual dividend of $7.40 per share and has a dividend yield of 4.5%. Pennsylvania Real Estate Investment Trust pays out -67.7% of its earnings in the form of a dividend. Simon Property Group pays out 130.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Simon Property Group has increased its dividend for 8 consecutive years. Pennsylvania Real Estate Investment Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Pennsylvania Real Estate Investment Trust has a beta of 1.35, indicating that its share price is 35% more volatile than the S&P 500. Comparatively, Simon Property Group has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Pennsylvania Real Estate Investment Trust and Simon Property Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pennsylvania Real Estate Investment Trust 1 6 0 0 1.86
Simon Property Group 0 5 11 0 2.69

Pennsylvania Real Estate Investment Trust currently has a consensus target price of $13.83, suggesting a potential upside of 18.23%. Simon Property Group has a consensus target price of $191.88, suggesting a potential upside of 15.93%. Given Pennsylvania Real Estate Investment Trust’s higher possible upside, research analysts plainly believe Pennsylvania Real Estate Investment Trust is more favorable than Simon Property Group.

Summary

Simon Property Group beats Pennsylvania Real Estate Investment Trust on 12 of the 17 factors compared between the two stocks.

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.

About Simon Property Group

Simon Property Group, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company owns, develops and manages retail real estate properties, which consist primarily of malls, Premium Outlets and The Mills. Simon Property Group, L.P. (Operating Partnership), is the Company’s partnership subsidiary that owns all of its real estate properties and other assets. As of December 31, 2016, the Company owned or held an interest in 206 income-producing properties in the United States, which consisted of 108 malls, 67 Premium Outlets, 14 Mills, four lifestyle centers, and 13 other retail properties in 37 states and Puerto Rico. As of December 31, 2016, it had redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants, underway at 27 properties in the United States and it had one outlet and one other retail project under development.

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