Retail Properties of America (NYSE: RPAI) and GGP (NYSE:GGP) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, earnings, analyst recommendations, risk and profitability.

Profitability

This table compares Retail Properties of America and GGP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Retail Properties of America 28.84% 7.61% 3.71%
GGP 29.96% 8.34% 3.05%

Institutional & Insider Ownership

79.1% of Retail Properties of America shares are held by institutional investors. Comparatively, 96.0% of GGP shares are held by institutional investors. 0.4% of Retail Properties of America shares are held by company insiders. Comparatively, 35.6% of GGP shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Retail Properties of America has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500. Comparatively, GGP has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Retail Properties of America and GGP, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Retail Properties of America 0 1 5 0 2.83
GGP 1 4 6 0 2.45

Retail Properties of America presently has a consensus target price of $16.08, suggesting a potential upside of 29.91%. GGP has a consensus target price of $25.36, suggesting a potential upside of 9.37%. Given Retail Properties of America’s stronger consensus rating and higher probable upside, research analysts plainly believe Retail Properties of America is more favorable than GGP.

Dividends

Retail Properties of America pays an annual dividend of $0.66 per share and has a dividend yield of 5.3%. GGP pays an annual dividend of $0.88 per share and has a dividend yield of 3.8%. Retail Properties of America pays out 101.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. GGP pays out 123.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. GGP has increased its dividend for 6 consecutive years. Retail Properties of America is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Retail Properties of America and GGP’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Retail Properties of America $583.14 million 4.82 $166.81 million $0.65 19.05
GGP $2.35 billion 9.46 $1.29 billion $0.71 32.66

GGP has higher revenue and earnings than Retail Properties of America. Retail Properties of America is trading at a lower price-to-earnings ratio than GGP, indicating that it is currently the more affordable of the two stocks.

Summary

GGP beats Retail Properties of America on 12 of the 17 factors compared between the two stocks.

Retail Properties of America Company Profile

Retail Properties of America, Inc. is a real estate investment trust (REIT). The Company owns and operates shopping centers located in the United States. As of December 31, 2016, it owned 156 retail operating properties representing 25,832,000 square feet of gross leasable area (GLA). Its retail operating portfolio includes neighborhood and community centers, power centers, and lifestyle centers and multi-tenant retail-focused mixed-use properties, as well as single-user retail properties. As of December 31, 2016, it had identified 10 target markets, including Dallas, Washington, District of Columbia/Baltimore, New York, Atlanta, Seattle, Chicago, Houston, San Antonio, Phoenix and Austin. Its properties include 23rd Street Plaza, Azalea Square I, Boulevard Plaza, Brown’s Lane, Cranberry Square, Denton Crossing, Dorman Center I & II, Edgemont Town Center, Edwards Multiplex, Green’s Corner, Home Depot Plaza, Lake Mary Pointe, Lincoln Park, University Town Center and Winchester Commons.

GGP Company Profile

GGP Inc. (GGP), formerly General Growth Properties, Inc., is a self-administered and self-managed real estate investment trust (REIT). The Company operates as a holding company, which is engaged in the operation, development and management of retail and other rental properties, primarily regional malls. As of December 31, 2016, the Company owned, either entirely or with joint venture partners, 127 retail properties located throughout the United States comprising approximately 125 million square feet of gross leasable area (GLA). As of December 31, 2016, the Company’s retail properties included 200 Lafayette, The Shoppes at Buckland Hills, Northridge Fashion Center, Brass Mill Center, Jordan Creek Town Center, Westroads Mall and Stonestown Galleria. The Company’s business is conducted through GGP Operating Partnership, LP (GGPOP), GGP Nimbus, LP (GGPN) and GGP Limited Partnership (GGPLP, and together with GGPN and GGPOP, the Operating Partnerships), subsidiaries of GGP.

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