Head-To-Head Review: PS Business Parks (NYSE:PSB) & Ladder Capital (NYSE:LADR)

PS Business Parks (NYSE:PSB) and Ladder Capital (NYSE:LADR) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Dividends

PS Business Parks pays an annual dividend of $4.20 per share and has a dividend yield of 3.2%. Ladder Capital pays an annual dividend of $0.80 per share and has a dividend yield of 10.3%. PS Business Parks pays out 61.9% of its earnings in the form of a dividend. Ladder Capital pays out 55.2% 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. PS Business Parks has increased its dividend for 6 consecutive years and Ladder Capital has increased its dividend for 4 consecutive years. Ladder Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

PS Business Parks has a beta of 0.44, indicating that its share price is 56% less volatile than the S&P 500. Comparatively, Ladder Capital has a beta of 2.37, indicating that its share price is 137% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for PS Business Parks and Ladder Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PS Business Parks 2 1 0 0 1.33
Ladder Capital 0 1 5 1 3.00

PS Business Parks currently has a consensus target price of $141.00, indicating a potential upside of 5.83%. Ladder Capital has a consensus target price of $12.66, indicating a potential upside of 63.74%. Given Ladder Capital’s stronger consensus rating and higher possible upside, analysts plainly believe Ladder Capital is more favorable than PS Business Parks.

Profitability

This table compares PS Business Parks and Ladder Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PS Business Parks 44.22% 18.56% 9.15%
Ladder Capital 18.39% 9.46% 2.25%

Institutional and Insider Ownership

71.7% of PS Business Parks shares are held by institutional investors. Comparatively, 48.1% of Ladder Capital shares are held by institutional investors. 1.4% of PS Business Parks shares are held by insiders. Comparatively, 11.2% of Ladder Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares PS Business Parks and Ladder Capital’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PS Business Parks $429.85 million 8.52 $174.97 million $6.78 19.65
Ladder Capital $504.89 million 1.85 $122.64 million $1.45 5.33

PS Business Parks has higher earnings, but lower revenue than Ladder Capital. Ladder Capital is trading at a lower price-to-earnings ratio than PS Business Parks, indicating that it is currently the more affordable of the two stocks.

PS Business Parks Company Profile

PS Business Parks, Inc., a member of the S&P SmallCap 600, is a REIT that acquires, develops, owns and operates commercial properties, primarily multi-tenant industrial, flex and office space. As of December 31, 2018, the Company wholly owned 28.2 million rentable square feet with approximately 5,050 commercial customers in six states and held a 95.0% interest in a 395-unit apartment complex.

Ladder Capital Company Profile

Ladder Capital Corp operates as a real estate investment trust in the United States. The company operates through three segments: Loans, Securities, and Real Estate. The Loans segment originates conduit first mortgage loans that are secured by cash-flowing commercial real estate; and originates and invests in balance sheet first mortgage loans secured by commercial real estate properties that are undergoing transition, including lease-up, sell-out, and renovation or repositioning. It also invests in note purchase financings, subordinated debt, mezzanine debt, and other structured finance products related to commercial real estate. The Securities segment invests in commercial mortgage-backed securities and the U.S. Agency Securities. This segment also invests in corporate bonds and real estate related equity investments. The Real Estate segment owns and invests in a portfolio of commercial and residential real estate properties, such as leased properties, student housing portfolio, industrial buildings, office buildings, shopping center, and condominium units. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Ladder Capital Corp was founded in 2008 and is headquartered in New York, New York.

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