AvalonBay Communities (NYSE:AVB) & LTC Properties (NYSE:LTC) Head-To-Head Review

AvalonBay Communities (NYSE:AVB) and LTC Properties (NYSE:LTC) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, dividends and analyst recommendations.

Institutional & Insider Ownership

92.4% of AvalonBay Communities shares are held by institutional investors. Comparatively, 75.7% of LTC Properties shares are held by institutional investors. 0.4% of AvalonBay Communities shares are held by company insiders. Comparatively, 1.8% of LTC Properties shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares AvalonBay Communities and LTC Properties’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AvalonBay Communities $2.28 billion 12.85 $974.53 million $9.00 23.36
LTC Properties $168.65 million 11.61 $154.98 million $3.06 16.10

AvalonBay Communities has higher revenue and earnings than LTC Properties. LTC Properties is trading at a lower price-to-earnings ratio than AvalonBay Communities, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

AvalonBay Communities has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500. Comparatively, LTC Properties has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500.

Profitability

This table compares AvalonBay Communities and LTC Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AvalonBay Communities 41.83% 8.63% 4.92%
LTC Properties 63.58% 13.18% 7.05%

Analyst Ratings

This is a breakdown of recent recommendations for AvalonBay Communities and LTC Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AvalonBay Communities 0 7 8 0 2.53
LTC Properties 3 0 0 0 1.00

AvalonBay Communities currently has a consensus target price of $213.79, indicating a potential upside of 1.68%. LTC Properties has a consensus target price of $33.00, indicating a potential downside of 33.02%. Given AvalonBay Communities’ stronger consensus rating and higher probable upside, analysts plainly believe AvalonBay Communities is more favorable than LTC Properties.

Dividends

AvalonBay Communities pays an annual dividend of $6.08 per share and has a dividend yield of 2.9%. LTC Properties pays an annual dividend of $2.28 per share and has a dividend yield of 4.6%. AvalonBay Communities pays out 67.6% of its earnings in the form of a dividend. LTC Properties pays out 74.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. AvalonBay Communities has raised its dividend for 7 consecutive years.

Summary

AvalonBay Communities beats LTC Properties on 12 of the 17 factors compared between the two stocks.

About AvalonBay Communities

As of March 31, 2019, the Company owned or held a direct or indirect ownership interest in 291 apartment communities containing 85,313 apartment homes in 12 states and the District of Columbia, of which 19 communities were under development and nine communities were under redevelopment. The Company is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in leading metropolitan areas primarily in New England, the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific Northwest, and the Northern and Southern California regions of the United States.

About LTC Properties

LTC is a real estate investment trust (REIT) investing in seniors housing and health care properties primarily through sale-leasebacks, mortgage financing, joint-ventures and structured finance solutions including preferred equity and mezzanine lending. LTC holds more than 200 investments in 28 states with 30 operating partners. The portfolio is comprised of approximately 50% seniors housing and 50% skilled nursing properties.

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