American Homes 4 Rent (NYSE: AMH) and Mid-America Apartment Communities (NYSE:MAA) are both mid-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitabiliy, earnings, risk, institutional ownership, valuation, analyst recommendations and dividends.
Profitability
This table compares American Homes 4 Rent and Mid-America Apartment Communities’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| American Homes 4 Rent | 1.92% | 0.35% | 0.21% |
| Mid-America Apartment Communities | 15.80% | 4.31% | 2.38% |
Insider & Institutional Ownership
92.9% of American Homes 4 Rent shares are owned by institutional investors. Comparatively, 92.2% of Mid-America Apartment Communities shares are owned by institutional investors. 27.8% of American Homes 4 Rent shares are owned by company insiders. Comparatively, 1.3% of Mid-America Apartment Communities shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Dividends
American Homes 4 Rent pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Mid-America Apartment Communities pays an annual dividend of $3.48 per share and has a dividend yield of 3.4%. American Homes 4 Rent pays out -133.3% of its earnings in the form of a dividend. Mid-America Apartment Communities pays out 148.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Homes 4 Rent has increased its dividend for 6 consecutive years.
Earnings and Valuation
This table compares American Homes 4 Rent and Mid-America Apartment Communities’ revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| American Homes 4 Rent | $917.68 million | 6.49 | $455.79 million | ($0.15) | -153.39 |
| Mid-America Apartment Communities | $1.35 billion | 8.71 | $761.51 million | $2.34 | 44.24 |
Mid-America Apartment Communities has higher revenue and earnings than American Homes 4 Rent. American Homes 4 Rent is trading at a lower price-to-earnings ratio than Mid-America Apartment Communities, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of recent recommendations and price targets for American Homes 4 Rent and Mid-America Apartment Communities, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Homes 4 Rent | 0 | 5 | 5 | 0 | 2.50 |
| Mid-America Apartment Communities | 0 | 2 | 10 | 0 | 2.83 |
American Homes 4 Rent presently has a consensus target price of $24.29, suggesting a potential upside of 5.54%. Mid-America Apartment Communities has a consensus target price of $107.36, suggesting a potential upside of 3.70%. Given American Homes 4 Rent’s higher probable upside, research analysts plainly believe American Homes 4 Rent is more favorable than Mid-America Apartment Communities.
Volatility and Risk
American Homes 4 Rent has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500. Comparatively, Mid-America Apartment Communities has a beta of 0.35, indicating that its share price is 65% less volatile than the S&P 500.
Summary
Mid-America Apartment Communities beats American Homes 4 Rent on 10 of the 17 factors compared between the two stocks.
About American Homes 4 Rent
American Homes 4 Rent is an internally managed real estate investment trust (REIT) focused on acquiring, renovating, leasing and operating single-family homes as rental properties. The Company’s primary objective is to generate attractive risk-adjusted returns for its shareholders through dividends and capital appreciation by acquiring, renovating, leasing and operating single-family homes as rental properties. As of December 31, 2016, it owned 48,422 single-family properties in 22 states, including 1,119 properties held for sale, and had an additional 47 properties in escrow that it intended to acquire. Its integrated operating platform offers property management, acquisitions, construction, marketing, leasing, financial and administrative functions. The Company may seek to invest in condominium units, townhouses and real estate-related debt investments. The Company is externally managed and advised by American Homes 4 Rent Advisor, LLC (the Advisor).
About Mid-America Apartment Communities
Mid-America Apartment Communities, Inc. is a multifamily focused, self-administered and self-managed real estate investment trust (REIT). The Company owns, operates, acquires and develops apartment communities primarily located in the Southeast and Southwest regions of the United States. It operates through three segments: Large market same store, Secondary market same store and Non-Same Store and Other. Its Large market same store communities are communities in markets with a population of at least one million and at least 1% of the total public multifamily REIT units that it has owned. Its Secondary market same store communities are communities in markets with populations of more than one million but less than 1% of the total public multifamily REIT units or markets with populations of less than one million that it has owned. Its Non-same store communities and other includes recent acquisitions and communities in development or lease-up communities.
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