Colony Capital (NYSE: CLNY) and Apartment Investment and Management (NYSE:AIV) are both financials companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Profitability

This table compares Colony Capital and Apartment Investment and Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Colony Capital 31.43% 3.16% 2.88%
Apartment Investment and Management 20.64% 12.46% 3.29%

Risk and Volatility

Colony Capital has a beta of 0.75, meaning that its stock price is 25% less volatile than the S&P 500. Comparatively, Apartment Investment and Management has a beta of 0.46, meaning that its stock price is 54% less volatile than the S&P 500.

Insider and Institutional Ownership

94.1% of Colony Capital shares are held by institutional investors. Comparatively, 98.3% of Apartment Investment and Management shares are held by institutional investors. 17.7% of Colony Capital shares are held by company insiders. Comparatively, 1.2% of Apartment Investment and Management shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Colony Capital pays an annual dividend of $1.60 per share and has a dividend yield of 7.4%. Apartment Investment and Management pays an annual dividend of $1.44 per share and has a dividend yield of 3.2%. Colony Capital pays out 179.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Apartment Investment and Management pays out 113.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Colony Capital has increased its dividend for 7 consecutive years and Apartment Investment and Management has increased its dividend for 6 consecutive years. Colony Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings for Colony Capital and Apartment Investment and Management, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Colony Capital 0 1 2 0 2.67
Apartment Investment and Management 2 4 2 0 2.00

Colony Capital currently has a consensus target price of $27.50, suggesting a potential upside of 27.79%. Apartment Investment and Management has a consensus target price of $46.38, suggesting a potential upside of 3.84%. Given Colony Capital’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Colony Capital is more favorable than Apartment Investment and Management.

Valuation and Earnings

This table compares Colony Capital and Apartment Investment and Management’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Colony Capital N/A N/A N/A $0.89 24.18
Apartment Investment and Management $980.21 million 7.15 $576.30 million $1.27 35.17

Apartment Investment and Management has higher revenue and earnings than Colony Capital. Colony Capital is trading at a lower price-to-earnings ratio than Apartment Investment and Management, indicating that it is currently the more affordable of the two stocks.

Summary

Colony Capital beats Apartment Investment and Management on 7 of the 13 factors compared between the two stocks.

Colony Capital Company Profile

Colony Capital, Inc., formerly Colony Financial, Inc., is a global real estate and investment management company. The Company operates through five segments: Real Estate Equity, including Light industrial real estate assets and operating platform; Single-family residential rentals through an investment in Colony Starwood Homes and Other real estate equity investments; Real Estate Debt, which includes loan originations and acquisitions, and Investment Management, which includes investment management of the Company-sponsored funds and other investment vehicles. Through its global investment management business, it has over $18.8 billion of assets under management. Its business objective is to provide risk-adjusted returns to its investors through a diversified portfolio of direct and indirect real estate-related equity and real estate debt investments, and fee bearing management contracts on investment funds that it manages.

Apartment Investment and Management Company Profile

Apartment Investment and Management Company (Aimco) is a self-administered and self-managed real estate investment trust (REIT). Aimco, through its subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, holds the ownership interests in the Aimco Operating Partnership. It operates through two segments: conventional real estate and affordable real estate. As of December 31, 2016, its real estate portfolio consisted of 189 apartment communities with 46,311 apartment homes. Aimco Operating Partnership conducts the Company’s business, which is focused on the ownership, management, redevelopment and limited development of apartment communities located in the coastal and job growth markets of the United States. Its Conventional segment consists of apartment communities it classifies as Conventional Same Store and Conventional Non-Same Store. Its affordable portfolio consists primarily of apartment communities that it manages that are owned through low-income housing tax credit partnerships.

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