Critical Survey: Apartment Investment and Management (NYSE:AIV) and Arbor Realty Trust (NYSE:ABR)

Arbor Realty Trust (NYSE:ABR) and Apartment Investment and Management (NYSE:AIV) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Risk & Volatility

Arbor Realty Trust has a beta of 1.88, suggesting that its stock price is 88% more volatile than the S&P 500. Comparatively, Apartment Investment and Management has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Profitability

This table compares Arbor Realty Trust and Apartment Investment and Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arbor Realty Trust 28.94% 7.88% 1.44%
Apartment Investment and Management 17.37% 8.15% 2.20%

Insider & Institutional Ownership

40.0% of Arbor Realty Trust shares are owned by institutional investors. 7.4% of Arbor Realty Trust shares are owned by insiders. Comparatively, 1.4% of Apartment Investment and Management shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Arbor Realty Trust and Apartment Investment and Management’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arbor Realty Trust $315.94 million 6.48 $128.63 million $1.36 12.14
Apartment Investment and Management $914.29 million 1.04 $474.08 million $3.10 2.06

Apartment Investment and Management has higher revenue and earnings than Arbor Realty Trust. Apartment Investment and Management is trading at a lower price-to-earnings ratio than Arbor Realty Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Arbor Realty Trust and Apartment Investment and Management, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arbor Realty Trust 0 1 3 0 2.75
Apartment Investment and Management 1 7 1 0 2.00

Arbor Realty Trust currently has a consensus target price of $12.67, indicating a potential downside of 23.28%. Apartment Investment and Management has a consensus target price of $39.83, indicating a potential upside of 524.35%. Given Apartment Investment and Management’s higher probable upside, analysts clearly believe Apartment Investment and Management is more favorable than Arbor Realty Trust.

Dividends

Arbor Realty Trust pays an annual dividend of $1.32 per share and has a dividend yield of 8.0%. Apartment Investment and Management pays an annual dividend of $2.03 per share and has a dividend yield of 31.8%. Arbor Realty Trust pays out 97.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Apartment Investment and Management pays out 65.5% of its earnings in the form of a dividend. Arbor Realty Trust has increased its dividend for 6 consecutive years. Apartment Investment and Management is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Arbor Realty Trust beats Apartment Investment and Management on 9 of the 17 factors compared between the two stocks.

Arbor Realty Trust Company Profile

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates in two segments, Structured Business and Agency Business. It primarily invests in real estate-related bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. The company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower's equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. In addition, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. 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. The company was incorporated in 2003 and is headquartered in Uniondale, New York.

Apartment Investment and Management Company Profile

Aimco is a Real Estate Investment Trust focused on property development, redevelopment, and various other value-creating investment strategies, targeting the U.S. multifamily market. Aimco is traded on the New York Stock Exchange as AIV. For more information about Aimco, please visit our website www.aimco.com.

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