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

Valuation & Earnings

This table compares American Residential Properties and Colony Starwood Homes’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Residential Properties N/A N/A N/A ($1.40) -11.35
Colony Starwood Homes $575.68 million 8.28 -$81.26 million ($0.28) -132.61

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

Dividends

American Residential Properties pays an annual dividend of $0.40 per share and has a dividend yield of 2.5%. Colony Starwood Homes pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. American Residential Properties pays out -28.6% of its earnings in the form of a dividend. Colony Starwood Homes pays out -314.3% 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.

Profitability

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

Net Margins Return on Equity Return on Assets
American Residential Properties -38.70% -9.17% -3.64%
Colony Starwood Homes -7.41% -1.07% -0.47%

Analyst Recommendations

This is a summary of current recommendations and price targets for American Residential Properties and Colony Starwood Homes, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Residential Properties 0 0 0 0 N/A
Colony Starwood Homes 0 4 6 0 2.60

Colony Starwood Homes has a consensus price target of $37.50, suggesting a potential upside of 1.00%. Given Colony Starwood Homes’ higher probable upside, analysts clearly believe Colony Starwood Homes is more favorable than American Residential Properties.

Summary

Colony Starwood Homes beats American Residential Properties on 8 of the 9 factors compared between the two stocks.

American Residential Properties Company Profile

American Residential Properties, Inc. is an internally managed real estate investment company, which is organized as a real estate investment trust. The Company acquires, owns, renovates, and manages single-family homes as rental properties. American Residential Properties OP, L.P. acts as its operating partnership. American Residential Leasing Company, LLC is a wholly owned subsidiary of its operating partnership. The Company owns 8,893 properties in Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Nevada, North Carolina, Ohio, South Carolina, Tennessee and Texas that were 81% leased, and it managed an additional 437 properties for ARP Phoenix Fund I, LP in Arizona and Nevada. In addition to its primary business, the Company has a private mortgage financing business.

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.

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