Elme Communities (NYSE:ELME) vs. American Homes 4 Rent (NYSE:AMH) Critical Analysis

Elme Communities (NYSE:ELME) and American Homes 4 Rent (NYSE:AMH) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, profitability, earnings, dividends, valuation, risk and analyst recommendations.

Earnings and Valuation

This table compares Elme Communities and American Homes 4 Rent”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Elme Communities	$206.36 million	0.94	-$154.16 million	($1.52)	-1.43
American Homes 4 Rent	$1.85 billion	6.29	$452.97 million	$1.18	27.09

American Homes 4 Rent has higher revenue and earnings than Elme Communities. Elme Communities is trading at a lower price-to-earnings ratio than American Homes 4 Rent, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Elme Communities and American Homes 4 Rent’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Elme Communities	-74.71%	-20.43%	-8.29%
American Homes 4 Rent	24.48%	5.93%	3.47%

Insider & Institutional Ownership

87.9% of Elme Communities shares are held by institutional investors. Comparatively, 91.9% of American Homes 4 Rent shares are held by institutional investors. 1.4% of Elme Communities shares are held by company insiders. Comparatively, 5.7% of American Homes 4 Rent shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Elme Communities pays an annual dividend of $0.36 per share and has a dividend yield of 16.6%. American Homes 4 Rent pays an annual dividend of $1.32 per share and has a dividend yield of 4.1%. Elme Communities pays out -23.7% of its earnings in the form of a dividend. American Homes 4 Rent pays out 111.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Homes 4 Rent has raised its dividend for 5 consecutive years. Elme Communities is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Elme Communities has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500. Comparatively, American Homes 4 Rent has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Elme Communities and American Homes 4 Rent, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Elme Communities	1	3	0	0	1.75
American Homes 4 Rent	0	11	8	0	2.42

Elme Communities presently has a consensus target price of $18.00, suggesting a potential upside of 727.59%. American Homes 4 Rent has a consensus target price of $35.39, suggesting a potential upside of 10.69%. Given Elme Communities’ higher possible upside, equities research analysts clearly believe Elme Communities is more favorable than American Homes 4 Rent.

Summary

American Homes 4 Rent beats Elme Communities on 14 of the 17 factors compared between the two stocks.

About Elme Communities

Elme Communities is committed to elevating what home can be for middle-income renters by providing a higher level of quality, service, and experience. The Company is a multifamily real estate investment trust that owns and operates approximately 9,400 apartment homes in the Washington, DC metro and the Atlanta metro regions, and owns approximately 300,000 square feet of commercial space. Focused on providing quality, affordable homes to a deep, solid, and underserved base of mid-market demand, Elme Communities is building long-term value for shareholders.

About American Homes 4 Rent

American Homes 4 Rent operates as a real estate investment trust. It engages in the acquisition, renovation, leasing, and operating of single-family homes as rental properties. The company was founded by Bradley Wayne Hughes, Sr. on October 19, 2012 and is headquartered in Las Vegas, NV.