AvalonBay Communities (NYSE: AVB) and United Dominion Realty Trust (NYSE:UDR) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, dividends and risk.

Profitability

This table compares AvalonBay Communities and United Dominion Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AvalonBay Communities 41.55% 8.66% 4.94%
United Dominion Realty Trust 29.41% 10.18% 3.85%

Valuation and Earnings

This table compares AvalonBay Communities and United Dominion Realty Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AvalonBay Communities $2.05 billion 12.11 $1.03 billion $6.40 28.03
United Dominion Realty Trust $959.86 million 10.84 $292.71 million $1.06 36.67

AvalonBay Communities has higher revenue and earnings than United Dominion Realty Trust. AvalonBay Communities is trading at a lower price-to-earnings ratio than United Dominion Realty Trust, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

AvalonBay Communities has a beta of 0.35, suggesting that its share price is 65% less volatile than the S&P 500. Comparatively, United Dominion Realty Trust has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for AvalonBay Communities and United Dominion Realty Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AvalonBay Communities 1 7 8 0 2.44
United Dominion Realty Trust 2 10 3 0 2.07

AvalonBay Communities currently has a consensus price target of $200.31, indicating a potential upside of 11.67%. United Dominion Realty Trust has a consensus price target of $39.75, indicating a potential upside of 2.26%. Given AvalonBay Communities’ stronger consensus rating and higher possible upside, research analysts plainly believe AvalonBay Communities is more favorable than United Dominion Realty Trust.

Institutional and Insider Ownership

94.8% of AvalonBay Communities shares are owned by institutional investors. Comparatively, 96.6% of United Dominion Realty Trust shares are owned by institutional investors. 0.5% of AvalonBay Communities shares are owned by insiders. Comparatively, 3.1% of United Dominion Realty Trust shares are owned by 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

AvalonBay Communities pays an annual dividend of $5.68 per share and has a dividend yield of 3.2%. United Dominion Realty Trust pays an annual dividend of $1.24 per share and has a dividend yield of 3.2%. AvalonBay Communities pays out 88.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. United Dominion Realty Trust pays out 117.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AvalonBay Communities has raised its dividend for 7 consecutive years and United Dominion Realty Trust has raised its dividend for 5 consecutive years.

Summary

AvalonBay Communities beats United Dominion Realty Trust on 12 of the 17 factors compared between the two stocks.

AvalonBay Communities Company Profile

AvalonBay Communities, Inc. is a real estate investment trust (REIT). The Company is focused on the development, redevelopment, acquisition, ownership and operation of multifamily communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California. Its segments include Established Communities, Other Stabilized Communities and Development/Redevelopment Communities. As of June 30, 2017, the Company owned or held a direct or indirect ownership interest in 287 apartment communities containing 83,123 apartment homes in 10 states and the District of Columbia, of which 23 communities were under development and nine communities were under redevelopment. It operates its apartment communities under three core brands: Avalon, AVA and Eaves by Avalon. Its real estate investments consist of operating apartment communities, communities in various stages of development (Development Communities) and Development Rights.

United Dominion Realty Trust Company Profile

UDR, Inc. is a self-administered real estate investment trust. The Company owns, operates, acquires, renovates, develops, redevelops, disposes of and manages multifamily apartment communities generally located in various markets across the United States. The Company’s segments are Same-Store Communities and Non-Mature Communities/Other. As of December 31, 2016, the Company’s consolidated real estate portfolio included 127 communities located in 18 markets, with a total of 39,454 completed apartment homes. As of December 31, 2016, the Company also had an ownership interest in 27 communities containing 6,849 apartment homes through unconsolidated joint ventures or partnerships. As of December 31, 2016, the Company’s properties were in various locations, such as Orange County, San Francisco and Los Angeles in California; Seattle, Washington; Richmond, Virginia; Baltimore, Maryland; Orlando and Tampa in Florida; Nashville, Tennessee, and Dallas and Austin in Texas.

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