Washington Prime Group (NYSE: WPG) and Pennsylvania Real Estate Investment Trust (NYSE:PEI) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.
Dividends
Washington Prime Group pays an annual dividend of $1.00 per share and has a dividend yield of 11.6%. Pennsylvania Real Estate Investment Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.7%. Washington Prime Group pays out 108.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pennsylvania Real Estate Investment Trust pays out -64.1% of its earnings in the form of a dividend. Pennsylvania Real Estate Investment Trust has raised its dividend for 5 consecutive years.
Risk and Volatility
Washington Prime Group has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, Pennsylvania Real Estate Investment Trust has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500.
Insider and Institutional Ownership
92.5% of Washington Prime Group shares are held by institutional investors. Comparatively, 96.0% of Pennsylvania Real Estate Investment Trust shares are held by institutional investors. 0.3% of Washington Prime Group shares are held by company insiders. Comparatively, 4.4% of Pennsylvania Real Estate Investment Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Profitability
This table compares Washington Prime Group and Pennsylvania Real Estate Investment Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Washington Prime Group | 22.65% | 17.36% | 3.73% |
| Pennsylvania Real Estate Investment Trust | -18.13% | -9.06% | -2.66% |
Analyst Ratings
This is a breakdown of recent recommendations for Washington Prime Group and Pennsylvania Real Estate Investment Trust, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Washington Prime Group | 0 | 1 | 0 | 0 | 2.00 |
| Pennsylvania Real Estate Investment Trust | 1 | 4 | 0 | 0 | 1.80 |
Pennsylvania Real Estate Investment Trust has a consensus price target of $15.88, suggesting a potential upside of 45.38%. Given Pennsylvania Real Estate Investment Trust’s higher possible upside, analysts plainly believe Pennsylvania Real Estate Investment Trust is more favorable than Washington Prime Group.
Valuation & Earnings
This table compares Washington Prime Group and Pennsylvania Real Estate Investment Trust’s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Washington Prime Group | $819.27 million | 1.95 | $487.39 million | $0.92 | 9.37 |
| Pennsylvania Real Estate Investment Trust | $392.34 million | 1.94 | $217.76 million | ($1.31) | -8.34 |
Washington Prime Group has higher revenue and earnings than Pennsylvania Real Estate Investment Trust. Pennsylvania Real Estate Investment Trust is trading at a lower price-to-earnings ratio than Washington Prime Group, indicating that it is currently the more affordable of the two stocks.
Summary
Washington Prime Group beats Pennsylvania Real Estate Investment Trust on 9 of the 15 factors compared between the two stocks.
About Washington Prime Group
Washington Prime Group Inc. (WPG Inc.), formerly WP Glimcher Inc., operates as a self-administered and self-managed real estate investment trust (REIT). The Company’s primary business is the ownership, development and management of retail real estate within the United States. The Company owns, develops and manages enclosed retail properties and community centers. As of December 31, 2016, its assets consisted of material interests in 114 shopping centers in the United States, consisting of approximately 63 million square feet of gross leasable area. The Company also owns parcels of land, which can be used for either the development of new shopping centers or the expansion of existing properties. Washington Prime Group, L.P. is the Company’s majority-owned partnership subsidiary that owns, develops and manages, through its affiliates, all of WPG Inc.’s real estate properties and other assets. Its properties include Irving Mall, Lindale Mall, Markland Plaza and Royal Eagle Plaza.
About Pennsylvania Real Estate Investment Trust
Pennsylvania Real Estate Investment Trust (PREIT) is a self-managed and self-administered real estate investment trust (REIT). The Company’s primary business is owning and operating retail shopping malls, which it does primarily through operating partnership, PREIT Associates, L.P. (PREIT Associates). The Company is engaged in the ownership, management, leasing, acquisition, redevelopment, development and disposition of shopping malls. The Company has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region. As of December 31, 2016, the Company owned interests in 30 retail properties, of which 26 are operating properties and four are development or redevelopment properties. As of December 31, 2016, the Company’s 26 operating properties included 22 shopping malls and four other retail properties, had a total of 21.7 million square feet and were located in nine states.
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