Critical Analysis: Douglas Emmett (NYSE:DEI) and American Tower (NYSE:AMT)

Douglas Emmett (NYSE:DEI) and American Tower (NYSE:AMT) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, valuation, risk, dividends and analyst recommendations.

Earnings & Valuation

This table compares Douglas Emmett and American Tower”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Douglas Emmett	$1.00 billion	2.02	$16.27 million	($0.17)	-71.26
American Tower	$10.64 billion	7.30	$2.53 billion	$6.19	26.93

American Tower has higher revenue and earnings than Douglas Emmett. Douglas Emmett is trading at a lower price-to-earnings ratio than American Tower, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Douglas Emmett and American Tower’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Douglas Emmett	-2.59%	-0.74%	-0.28%
American Tower	26.81%	27.79%	4.57%

Risk & Volatility

Douglas Emmett has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500. Comparatively, American Tower has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Dividends

Douglas Emmett pays an annual dividend of $0.76 per share and has a dividend yield of 6.3%. American Tower pays an annual dividend of $7.16 per share and has a dividend yield of 4.3%. Douglas Emmett pays out -447.1% of its earnings in the form of a dividend. American Tower pays out 115.7% 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 Tower has raised its dividend for 1 consecutive years. Douglas Emmett is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Douglas Emmett and American Tower, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Douglas Emmett	1	7	1	0	2.00
American Tower	0	4	16	1	2.86

Douglas Emmett presently has a consensus target price of $13.57, indicating a potential upside of 12.02%. American Tower has a consensus target price of $215.57, indicating a potential upside of 29.33%. Given American Tower’s stronger consensus rating and higher possible upside, analysts plainly believe American Tower is more favorable than Douglas Emmett.

Institutional & Insider Ownership

97.4% of Douglas Emmett shares are owned by institutional investors. Comparatively, 92.7% of American Tower shares are owned by institutional investors. 13.0% of Douglas Emmett shares are owned by company insiders. Comparatively, 0.1% of American Tower shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

American Tower beats Douglas Emmett on 13 of the 18 factors compared between the two stocks.

About Douglas Emmett

Douglas Emmett, Inc. (DEI) is a fully integrated, self-administered and self-managed real estate investment trust (REIT), and one of the largest owners and operators of high-quality office and multifamily properties located in the premier coastal submarkets of Los Angeles and Honolulu. Douglas Emmett focuses on owning and acquiring a substantial share of top-tier office properties and premier multifamily communities in neighborhoods that possess significant supply constraints, high-end executive housing and key lifestyle amenities.

About American Tower

American Tower, one of the largest global REITs, is a leading independent owner, operator and developer of multitenant communications real estate with a portfolio of over 224,000 communications sites and a highly interconnected footprint of U.S. data center facilities.