Hannon Armstrong Sustainable Infrastructure Capital (NYSE: HASI) and Easterly Government Properties (NYSE:DEA) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, valuation, profitabiliy, dividends, risk and analyst recommendations.

Profitability

This table compares Hannon Armstrong Sustainable Infrastructure Capital and Easterly Government Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hannon Armstrong Sustainable Infrastructure Capital 29.99% 8.57% 2.66%
Easterly Government Properties 3.40% 0.58% 0.38%

Insider & Institutional Ownership

70.6% of Hannon Armstrong Sustainable Infrastructure Capital shares are held by institutional investors. Comparatively, 91.9% of Easterly Government Properties shares are held by institutional investors. 7.2% of Hannon Armstrong Sustainable Infrastructure Capital shares are held by insiders. Comparatively, 18.1% of Easterly Government Properties shares are held by 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

Hannon Armstrong Sustainable Infrastructure Capital pays an annual dividend of $1.32 per share and has a dividend yield of 5.7%. Easterly Government Properties pays an annual dividend of $1.00 per share and has a dividend yield of 5.0%. Hannon Armstrong Sustainable Infrastructure Capital pays out 244.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Easterly Government Properties pays out 1,000.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hannon Armstrong Sustainable Infrastructure Capital has increased its dividend for 3 consecutive years. Hannon Armstrong Sustainable Infrastructure Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Hannon Armstrong Sustainable Infrastructure Capital and Easterly Government Properties’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hannon Armstrong Sustainable Infrastructure Capital $38.87 million 31.74 $28.66 million $0.54 43.06
Easterly Government Properties $116.22 million 6.33 $59.99 million $0.10 199.02

Easterly Government Properties has higher revenue and earnings than Hannon Armstrong Sustainable Infrastructure Capital. Hannon Armstrong Sustainable Infrastructure Capital is trading at a lower price-to-earnings ratio than Easterly Government Properties, 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 Hannon Armstrong Sustainable Infrastructure Capital and Easterly Government Properties, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hannon Armstrong Sustainable Infrastructure Capital 0 1 7 0 2.88
Easterly Government Properties 0 1 2 0 2.67

Hannon Armstrong Sustainable Infrastructure Capital presently has a consensus price target of $25.57, indicating a potential upside of 9.98%. Easterly Government Properties has a consensus price target of $21.83, indicating a potential upside of 9.72%. Given Hannon Armstrong Sustainable Infrastructure Capital’s stronger consensus rating and higher possible upside, analysts clearly believe Hannon Armstrong Sustainable Infrastructure Capital is more favorable than Easterly Government Properties.

Volatility & Risk

Hannon Armstrong Sustainable Infrastructure Capital has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500. Comparatively, Easterly Government Properties has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500.

Summary

Hannon Armstrong Sustainable Infrastructure Capital beats Easterly Government Properties on 12 of the 17 factors compared between the two stocks.

Hannon Armstrong Sustainable Infrastructure Capital Company Profile

Hannon Armstrong Sustainable Infrastructure Capital, Inc. makes debt and equity investments in sustainable infrastructure, including energy efficiency and renewable energy. The Company focuses on providing preferred or senior level capital to sponsors and obligors for assets that generate long-term, recurring and predictable cash flows. The Company focuses its investment activities primarily on Energy Efficiency Projects, which include projects typically undertaken by energy service companies, which reduce a building’s or facility’s energy usage or cost by installing various building components, including heating, ventilation and air conditioning systems, lighting, energy controls, roofs, windows, building shells, and/or combined heat and power systems, and Renewable Energy Projects, which include projects that deploy cleaner energy sources, such as solar and wind to generate power production. It may also invest in other projects, such as water or communications infrastructure.

Easterly Government Properties Company Profile

Easterly Government Properties, Inc. is an internally managed real estate investment trust (REIT). The Company focuses on the acquisition, development and management of Class A commercial properties that are leased to the United States Government agencies. The Company leases its properties to such agencies through the United States General Services Administration (GSA). The operations of the Company are carried on primarily through Easterly Government Properties, LP and the subsidiaries of the Operating Partnership. As of December 31, 2016, it had 43 operating properties in the United States, including 40 operating properties that are leased primarily to the United States Government tenant agencies and three operating properties that are entirely leased to private tenants, encompassing approximately 3.1 million square feet in the aggregate. In addition, the Company had one property under development encompassing approximately 0.1 million square feet as of December 31, 2016.

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