Critical Review: Regency Centers (REG) & Simon Property Group (SPG)

Regency Centers (NYSE: REG) and Simon Property Group (NYSE:SPG) are both large-cap financials companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Volatility & Risk

Regency Centers has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500. Comparatively, Simon Property Group has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Regency Centers 17.59% 2.82% 1.65%
Simon Property Group 31.96% 41.85% 6.09%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Regency Centers and Simon Property Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Regency Centers 0 5 3 1 2.56
Simon Property Group 0 5 11 0 2.69

Regency Centers currently has a consensus price target of $70.72, indicating a potential upside of 9.87%. Simon Property Group has a consensus price target of $191.88, indicating a potential upside of 16.41%. Given Simon Property Group’s stronger consensus rating and higher probable upside, analysts clearly believe Simon Property Group is more favorable than Regency Centers.

Valuation and Earnings

This table compares Regency Centers and Simon Property Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Regency Centers $614.37 million 17.82 $164.92 million $0.90 71.52
Simon Property Group $5.44 billion 19.40 $1.84 billion $5.66 29.12

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

Insider and Institutional Ownership

92.4% of Regency Centers shares are owned by institutional investors. Comparatively, 47.4% of Simon Property Group shares are owned by institutional investors. 12.7% of Regency Centers shares are owned by company insiders. Comparatively, 8.4% of Simon Property Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Regency Centers pays an annual dividend of $2.12 per share and has a dividend yield of 3.3%. Simon Property Group pays an annual dividend of $7.40 per share and has a dividend yield of 4.5%. Regency Centers pays out 235.6% 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. Regency Centers has raised its dividend for 8 consecutive years and Simon Property Group has raised its dividend for 4 consecutive years. Simon Property Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Simon Property Group beats Regency Centers on 13 of the 18 factors compared between the two stocks.

Regency Centers Company Profile

Regency Centers Corporation is a real estate investment trust (REIT). The Company is the general partner of Regency Centers, L.P. (the Operating Partnership). The Company is engaged in the ownership, management, leasing, acquisition and development of retail shopping centers through the Operating Partnership. The Company’s properties include Palm Valley Marketplace, Shops at Arizona, Amerige Heights Town Center, Clayton Valley Shopping Center, Five Points Shopping Center, French Valley Village Center, Hasley Canyon Village, Pleasant Hill Shopping Center, Snell & Branham Plaza, Applewood Shopping Center, Kent Place, Black Rock, Spring Valley Shopping Center and Pebblebrook Plaza. As of December 31, 2016, the Company owned all of the Preferred Units of the Operating Partnership and approximately 99.9% of the Units in the Operating Partnership. As of December 31, 2016, it owned direct or partial interests in 307 shopping centers.

Simon Property Group Company Profile

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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