Critical Survey: GGP (GGP) and Tanger Factory Outlet Centers (SKT)

GGP (NYSE: GGP) and Tanger Factory Outlet Centers (NYSE:SKT) are both mid-cap financials companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, valuation, profitability, analyst recommendations, earnings, institutional ownership and dividends.

Institutional & Insider Ownership

97.1% of GGP shares are held by institutional investors. Comparatively, 99.5% of Tanger Factory Outlet Centers shares are held by institutional investors. 35.6% of GGP shares are held by company insiders. Comparatively, 4.8% of Tanger Factory Outlet Centers shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for GGP and Tanger Factory Outlet Centers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GGP 1 5 6 0 2.42
Tanger Factory Outlet Centers 1 4 1 0 2.00

GGP currently has a consensus price target of $25.50, suggesting a potential upside of 8.97%. Tanger Factory Outlet Centers has a consensus price target of $24.88, suggesting a potential downside of 2.11%. Given GGP’s stronger consensus rating and higher probable upside, research analysts clearly believe GGP is more favorable than Tanger Factory Outlet Centers.

Earnings and Valuation

This table compares GGP and Tanger Factory Outlet Centers’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
GGP $2.35 billion 9.54 $1.29 billion $0.71 32.96
Tanger Factory Outlet Centers $465.83 million 5.16 $193.74 million $0.62 40.98

GGP has higher revenue and earnings than Tanger Factory Outlet Centers. GGP is trading at a lower price-to-earnings ratio than Tanger Factory Outlet Centers, indicating that it is currently the more affordable of the two stocks.

Dividends

GGP pays an annual dividend of $0.88 per share and has a dividend yield of 3.8%. Tanger Factory Outlet Centers pays an annual dividend of $1.37 per share and has a dividend yield of 5.4%. GGP pays out 123.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tanger Factory Outlet Centers pays out 221.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. GGP has increased its dividend for 5 consecutive years and Tanger Factory Outlet Centers has increased its dividend for 24 consecutive years. Tanger Factory Outlet Centers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares GGP and Tanger Factory Outlet Centers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GGP 29.96% 8.34% 3.05%
Tanger Factory Outlet Centers 12.34% 8.98% 2.37%

Risk & Volatility

GGP has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500. Comparatively, Tanger Factory Outlet Centers has a beta of 0.52, suggesting that its share price is 48% less volatile than the S&P 500.

Summary

GGP beats Tanger Factory Outlet Centers on 12 of the 17 factors compared between the two stocks.

About GGP

GGP Inc. (GGP), formerly General Growth Properties, Inc., is a self-administered and self-managed real estate investment trust (REIT). The Company operates as a holding company, which is engaged in the operation, development and management of retail and other rental properties, primarily regional malls. As of December 31, 2016, the Company owned, either entirely or with joint venture partners, 127 retail properties located throughout the United States comprising approximately 125 million square feet of gross leasable area (GLA). As of December 31, 2016, the Company’s retail properties included 200 Lafayette, The Shoppes at Buckland Hills, Northridge Fashion Center, Brass Mill Center, Jordan Creek Town Center, Westroads Mall and Stonestown Galleria. The Company’s business is conducted through GGP Operating Partnership, LP (GGPOP), GGP Nimbus, LP (GGPN) and GGP Limited Partnership (GGPLP, and together with GGPN and GGPOP, the Operating Partnerships), subsidiaries of GGP.

About Tanger Factory Outlet Centers

Tanger Factory Outlet Centers, Inc. is an owner and operator of outlet centers in the United States and Canada. The Company is a fully-integrated, self-administered and self-managed real estate investment trust (REIT), which focuses on developing, acquiring, owning, operating and managing outlet shopping centers. As of December 31, 2016, its portfolio consisted of 36 outlet centers, with a total gross leasable area of approximately 12.7 million square feet, which were 98% occupied and contained over 2,600 stores representing approximately 400 store brands. Its outlet centers and other assets are held by, and all of its operations are conducted by, Tanger Properties Limited Partnership and subsidiaries (Operating Partnership). The Company owns the majority of the units of partnership interest issued by the Operating Partnership, through its subsidiaries, Tanger GP Trust and Tanger LP Trust. Tanger GP Trust controls the Operating Partnership as its sole general partner.

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