Critical Contrast: Optibase (OBAS) and Armada Hoffler Properties (AHH)

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Optibase (NASDAQ:OBAS) and Armada Hoffler Properties (NYSE:AHH) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Earnings & Valuation

This table compares Optibase and Armada Hoffler Properties’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Optibase $16.59 million 2.69 -$1.12 million N/A N/A
Armada Hoffler Properties $302.77 million 2.45 $21.04 million $0.99 15.32

Armada Hoffler Properties has higher revenue and earnings than Optibase.

Risk and Volatility

Optibase has a beta of 0.35, indicating that its stock price is 65% less volatile than the S&P 500. Comparatively, Armada Hoffler Properties has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500.

Institutional and Insider Ownership

0.1% of Optibase shares are held by institutional investors. Comparatively, 81.9% of Armada Hoffler Properties shares are held by institutional investors. 17.1% of Optibase shares are held by insiders. Comparatively, 14.4% of Armada Hoffler Properties shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Optibase and Armada Hoffler Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Optibase -13.85% -3.03% -0.90%
Armada Hoffler Properties 9.85% 5.24% 2.10%

Analyst Recommendations

This is a breakdown of current ratings for Optibase and Armada Hoffler Properties, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Optibase 0 0 0 0 N/A
Armada Hoffler Properties 0 3 3 0 2.50

Armada Hoffler Properties has a consensus target price of $16.31, indicating a potential upside of 7.53%. Given Armada Hoffler Properties’ higher possible upside, analysts clearly believe Armada Hoffler Properties is more favorable than Optibase.

Dividends

Armada Hoffler Properties pays an annual dividend of $0.80 per share and has a dividend yield of 5.3%. Optibase does not pay a dividend. Armada Hoffler Properties pays out 80.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Armada Hoffler Properties has raised its dividend for 4 consecutive years.

Summary

Armada Hoffler Properties beats Optibase on 11 of the 14 factors compared between the two stocks.

About Optibase

Optibase Ltd., together with its subsidiaries, operates in the fixed-income real estate sector in Switzerland, Germany, and the United States. The company purchases and operates real estate properties intended for leasing and resale primarily for the purpose of commercial, industrial, office space, parking garage, and warehouse use, as well as for residential purposes. The company was formerly known as Optibase Advanced Systems (1990) Ltd. and changed its name to Optibase Ltd. in November 1993. The company was founded in 1990 and is headquartered in Herzliya, Israel. Optibase Ltd. is a subsidiary of The Capri Family Foundation.

About Armada Hoffler Properties

Armada Hoffler Properties, Inc. (NYSE: AHH) is a vertically-integrated, self-managed real estate investment trust ("REIT") with nearly four decades of experience developing, building, acquiring and managing high-quality, institutional-grade office, retail and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. The Company also provides general construction and development services to third-party clients, in addition to developing and building properties to be placed in its stabilized portfolio. The Company has elected to be taxed as a REIT for U.S. federal income tax purposes.

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