Agree Realty (NYSE: ADC) and Simon Property Group (NYSE:SPG) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, earnings, profitability, institutional ownership, valuation and analyst recommendations.

Insider & Institutional Ownership

87.2% of Agree Realty shares are held by institutional investors. Comparatively, 47.5% of Simon Property Group shares are held by institutional investors. 4.4% of Agree Realty shares are held by company insiders. Comparatively, 8.4% of Simon Property Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Agree Realty and Simon Property Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Agree Realty 49.26% 7.27% 4.42%
Simon Property Group 31.96% 41.85% 6.09%

Earnings and Valuation

This table compares Agree Realty and Simon Property Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Agree Realty $91.53 million 15.88 $45.11 million $2.04 24.38
Simon Property Group $5.44 billion 19.33 $1.84 billion $5.66 29.02

Simon Property Group has higher revenue and earnings than Agree Realty. Agree Realty is trading at a lower price-to-earnings ratio than Simon Property Group, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations and price targets for Agree Realty and Simon Property Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Agree Realty 0 2 7 0 2.78
Simon Property Group 0 5 11 0 2.69

Agree Realty currently has a consensus price target of $54.63, indicating a potential upside of 9.84%. Simon Property Group has a consensus price target of $191.88, indicating a potential upside of 16.83%. Given Simon Property Group’s higher probable upside, analysts plainly believe Simon Property Group is more favorable than Agree Realty.

Risk & Volatility

Agree Realty has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Simon Property Group has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500.

Dividends

Agree Realty pays an annual dividend of $2.08 per share and has a dividend yield of 4.2%. Simon Property Group pays an annual dividend of $7.40 per share and has a dividend yield of 4.5%. Agree Realty pays out 102.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Simon Property Group pays out 130.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Agree Realty has increased its dividend for 5 consecutive years and Simon Property Group has increased its dividend for 8 consecutive years. Simon Property Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Simon Property Group beats Agree Realty on 13 of the 17 factors compared between the two stocks.

About Agree Realty

Agree Realty Corporation (Agree Realty) is an integrated real estate investment trust (REIT) primarily focused on the ownership, acquisition, development and management of retail properties. The Company operates through Agree Limited Partnership (the Operating Partnership). As of December 31, 2016, its portfolio consisted of 366 properties located in 43 states and totaling approximately seven million square feet of gross leasable area (GLA). As of December 31, 2016, its portfolio included 363 net lease properties, which contributed approximately 98.1% of annualized base rent, and three community shopping centers. The Company’s business objective is to generate consistent shareholder returns by investing in and actively managing a diversified portfolio of retail properties net leased to industry tenants. Its community shopping centers include Capital Plaza, Frankfort; Central Michigan Commons, Mount Pleasant, and West Frankfort Plaza, West Frankfort.

About Simon Property Group

Simon Property Group, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company owns, develops and manages retail real estate properties, which consist primarily of malls, Premium Outlets and The Mills. Simon Property Group, L.P. (Operating Partnership), is the Company’s partnership subsidiary that owns all of its real estate properties and other assets. As of December 31, 2016, the Company owned or held an interest in 206 income-producing properties in the United States, which consisted of 108 malls, 67 Premium Outlets, 14 Mills, four lifestyle centers, and 13 other retail properties in 37 states and Puerto Rico. As of December 31, 2016, it had redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants, underway at 27 properties in the United States and it had one outlet and one other retail project under development.

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