Financial Analysis: American Assets Trust (NYSE:AAT) and Alexander’s (NYSE:ALX)

American Assets Trust (NYSE:AAT) and Alexander’s (NYSE:ALX) are both small-cap real estate companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, earnings, risk, valuation, institutional ownership and profitability.

Profitability

This table compares American Assets Trust and Alexander’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Assets Trust	4.09%	1.66%	0.62%
Alexander’s	79.06%	123.09%	14.43%

Volatility and Risk

American Assets Trust has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, Alexander’s has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.

Earnings and Valuation

This table compares American Assets Trust and Alexander’s”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Assets Trust	$436.20 million	3.22	$71.37 million	$0.29	78.83
Alexander’s	$213.18 million	6.56	$28.22 million	$33.05	8.28

American Assets Trust has higher revenue and earnings than Alexander’s. Alexander’s is trading at a lower price-to-earnings ratio than American Assets Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

American Assets Trust pays an annual dividend of $1.36 per share and has a dividend yield of 5.9%. Alexander’s pays an annual dividend of $18.00 per share and has a dividend yield of 6.6%. American Assets Trust pays out 469.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Alexander’s pays out 54.5% of its earnings in the form of a dividend. American Assets Trust has raised its dividend for 4 consecutive years and Alexander’s has raised its dividend for 1 consecutive years. Alexander’s is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for American Assets Trust and Alexander’s, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Assets Trust	1	2	0	0	1.67
Alexander’s	1	0	1	1	2.67

American Assets Trust currently has a consensus price target of $21.50, indicating a potential downside of 5.95%. Alexander’s has a consensus price target of $212.00, indicating a potential downside of 22.56%. Given American Assets Trust’s higher probable upside, research analysts clearly believe American Assets Trust is more favorable than Alexander’s.

Institutional & Insider Ownership

90.4% of American Assets Trust shares are owned by institutional investors. Comparatively, 32.0% of Alexander’s shares are owned by institutional investors. 37.9% of American Assets Trust shares are owned by company insiders. Comparatively, 26.4% of Alexander’s shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Alexander’s beats American Assets Trust on 10 of the 18 factors compared between the two stocks.

About American Assets Trust

American Assets Trust, Inc. is a full service, vertically integrated and self-administered real estate investment trust ("REIT"), headquartered in San Diego, California. The company has over 55 years of experience in acquiring, improving, developing and managing premier office, retail, and residential properties throughout the United States in some of the nation's most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Washington, Oregon, Texas and Hawaii. The company's office portfolio comprises approximately 4.1 million rentable square feet, and its retail portfolio comprises approximately 3.1 million rentable square feet. In addition, the company owns one mixed-use property (including approximately 94,000 rentable square feet of retail space and a 369-room all-suite hotel) and 2,110 multifamily units. In 2011, the company was formed to succeed to the real estate business of American Assets, Inc., a privately held corporation founded in 1967 and, as such, has significant experience, long-standing relationships and extensive knowledge of its core markets, submarkets and asset classes.

About Alexander’s

Alexander’s, Inc. (NYSE: ALX) is a real estate investment trust (REIT), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties. All references to we, us, our, Company and Alexander’s refer to Alexander’s, Inc. and its consolidated subsidiaries. We are managed by, and our properties are leased and developed by, Vornado Realty Trust (Vornado) (NYSE: VNO). We have five properties in New York City.