Critical Analysis: Alexandria Real Estate Equities (NYSE:ARE) & American Homes 4 Rent (NYSE:AMH)

Alexandria Real Estate Equities (NYSE:ARE) and American Homes 4 Rent (NYSE:AMH) are both large-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, valuation, risk and earnings.

Insider & Institutional Ownership

96.5% of Alexandria Real Estate Equities shares are owned by institutional investors. Comparatively, 91.9% of American Homes 4 Rent shares are owned by institutional investors. 1.2% of Alexandria Real Estate Equities shares are owned by insiders. Comparatively, 6.3% of American Homes 4 Rent shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Alexandria Real Estate Equities pays an annual dividend of $5.20 per share and has a dividend yield of 4.7%. American Homes 4 Rent pays an annual dividend of $1.04 per share and has a dividend yield of 3.0%. Alexandria Real Estate Equities pays out 486.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Homes 4 Rent pays out 108.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Alexandria Real Estate Equities has raised its dividend for 15 consecutive years. Alexandria Real Estate Equities is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Alexandria Real Estate Equities has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500. Comparatively, American Homes 4 Rent has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.

Earnings & Valuation

This table compares Alexandria Real Estate Equities and American Homes 4 Rent”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alexandria Real Estate Equities	$3.07 billion	6.35	$103.64 million	$1.07	104.25
American Homes 4 Rent	$1.70 billion	7.60	$380.17 million	$0.96	36.72

American Homes 4 Rent has lower revenue, but higher earnings than Alexandria Real Estate Equities. American Homes 4 Rent is trading at a lower price-to-earnings ratio than Alexandria Real Estate Equities, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Alexandria Real Estate Equities and American Homes 4 Rent’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alexandria Real Estate Equities	5.09%	0.68%	0.41%
American Homes 4 Rent	21.83%	4.89%	2.92%

Analyst Ratings

This is a breakdown of current ratings and target prices for Alexandria Real Estate Equities and American Homes 4 Rent, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alexandria Real Estate Equities	0	7	3	0	2.30
American Homes 4 Rent	0	4	11	0	2.73

Alexandria Real Estate Equities currently has a consensus target price of $131.22, suggesting a potential upside of 17.64%. American Homes 4 Rent has a consensus target price of $41.60, suggesting a potential upside of 18.01%. Given American Homes 4 Rent’s stronger consensus rating and higher probable upside, analysts plainly believe American Homes 4 Rent is more favorable than Alexandria Real Estate Equities.

Summary

American Homes 4 Rent beats Alexandria Real Estate Equities on 10 of the 17 factors compared between the two stocks.

About Alexandria Real Estate Equities

Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500 company, is a best-in-class, mission-driven life science REIT making a positive and lasting impact on the world. As the pioneer of the life science real estate niche since our founding in 1994, Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative life science, agtech, and advanced technology mega campuses in AAA innovation cluster locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a total market capitalization of $33.1 billion and an asset base in North America of 73.5 million SF as of December 31, 2023, which includes 42.0 million RSF of operating properties, 5.5 million RSF of Class A/A+ properties undergoing construction and one near-term project expected to commence construction in the next two years, 2.1 million RSF of priority anticipated development and redevelopment projects, and 23.9 million SF of future development projects. Alexandria has a longstanding and proven track record of developing Class A/A+ properties clustered in life science, agtech, and advanced technology mega campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science, agrifoodtech, climate innovation, and technology companies through our venture capital platform. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.

About American Homes 4 Rent

AMH (NYSE: AMH) is a leading large-scale integrated owner, operator and developer of single-family rental homes. We're an internally managed Maryland real estate investment trust (REIT) focused on acquiring, developing, renovating, leasing and managing homes as rental properties. Our goal is to simplify the experience of leasing a home and deliver peace of mind to households across the country. In recent years, we've been named one of Fortune's 2023 Best Workplaces in Real Estate, a 2023 Great Place to Work, a 2023 Most Loved Workplace, a 2023 Top U.S. Homebuilder by Builder100, and one of America's Most Responsible Companies 2023 and America's Most Trustworthy Companies 2023 by Newsweek and Statista Inc. As of December 31, 2023, we owned nearly 60,000 single-family properties in the Southeast, Midwest, Southwest and Mountain West regions of the United States.