Pebblebrook Hotel Trust (NYSE:PEB) and Retail Properties of America (NYSE:RPAI) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.

Dividends

Pebblebrook Hotel Trust pays an annual dividend of $1.52 per share and has a dividend yield of 6.0%. Retail Properties of America pays an annual dividend of $0.66 per share and has a dividend yield of 5.0%. Pebblebrook Hotel Trust pays out 62.0% of its earnings in the form of a dividend. Retail Properties of America pays out 64.1% 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. Pebblebrook Hotel Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current recommendations for Pebblebrook Hotel Trust and Retail Properties of America, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pebblebrook Hotel Trust 1 8 1 0 2.00
Retail Properties of America 0 1 0 0 2.00

Pebblebrook Hotel Trust presently has a consensus target price of $31.10, indicating a potential upside of 22.73%. Retail Properties of America has a consensus target price of $12.00, indicating a potential downside of 9.91%. Given Pebblebrook Hotel Trust’s higher probable upside, analysts clearly believe Pebblebrook Hotel Trust is more favorable than Retail Properties of America.

Risk & Volatility

Pebblebrook Hotel Trust has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500. Comparatively, Retail Properties of America has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500.

Profitability

This table compares Pebblebrook Hotel Trust and Retail Properties of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pebblebrook Hotel Trust -0.21% 0.16% 0.09%
Retail Properties of America 5.91% 2.17% 1.02%

Insider & Institutional Ownership

84.3% of Retail Properties of America shares are held by institutional investors. 1.3% of Pebblebrook Hotel Trust shares are held by insiders. Comparatively, 0.6% of Retail Properties of America 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 and Earnings

This table compares Pebblebrook Hotel Trust and Retail Properties of America’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pebblebrook Hotel Trust $828.68 million 3.99 $13.39 million $2.45 10.34
Retail Properties of America $482.50 million 5.90 $77.64 million $1.03 12.93

Retail Properties of America has lower revenue, but higher earnings than Pebblebrook Hotel Trust. Pebblebrook Hotel Trust is trading at a lower price-to-earnings ratio than Retail Properties of America, indicating that it is currently the more affordable of the two stocks.

Summary

Pebblebrook Hotel Trust beats Retail Properties of America on 8 of the 15 factors compared between the two stocks.

Pebblebrook Hotel Trust Company Profile

Pebblebrook Hotel Trust is a publicly traded real estate investment trust (“REIT”) organized to opportunistically acquire and invest primarily in upper upscale, full-service hotels located in urban markets in major gateway cities. The Company owns 61 hotels, totaling approximately 14,600 guest rooms, located in 10 states and the District of Columbia, including: Del Mar, California; Los Angeles, California (Beverly Hills, Santa Monica and West Hollywood); San Diego, California; San Francisco, California; Santa Cruz, California; Washington, DC; Coral Gables, Florida; Key West, Florida; Naples, Florida; Buckhead, Georgia; Chicago, Illinois; Boston, Massachusetts; New York, New York; Portland, Oregon; Philadelphia, Pennsylvania; Nashville, Tennessee; Columbia River Gorge, Washington; and Seattle, Washington.

Retail Properties of America Company Profile

Retail Properties of America, Inc. is a REIT that owns and operates high quality, strategically located open-air shopping centers, including properties with a mixed-use component. As of December 31, 2018, the Company owned 105 retail operating properties in the United States representing 20.1 million square feet. The Company is publicly traded on the New York Stock Exchange under the ticker symbol RPAI.

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