InfraREIT (NYSE: HIFR) and American Tower Corporation (REIT) (NYSE:AMT) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, dividends, profitability, risk and institutional ownership.

Dividends

InfraREIT pays an annual dividend of $1.00 per share and has a dividend yield of 4.5%. American Tower Corporation (REIT) pays an annual dividend of $2.64 per share and has a dividend yield of 1.9%. InfraREIT pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Tower Corporation (REIT) pays out 106.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. InfraREIT has raised its dividend for 5 consecutive years. InfraREIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

83.8% of InfraREIT shares are held by institutional investors. Comparatively, 92.1% of American Tower Corporation (REIT) shares are held by institutional investors. 28.0% of InfraREIT shares are held by company insiders. Comparatively, 0.9% of American Tower Corporation (REIT) shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

InfraREIT has a beta of 0.49, meaning that its share price is 51% less volatile than the S&P 500. Comparatively, American Tower Corporation (REIT) has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500.

Profitability

This table compares InfraREIT and American Tower Corporation (REIT)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
InfraREIT 28.31% 6.28% 3.13%
American Tower Corporation (REIT) 18.58% 16.70% 3.74%

Earnings and Valuation

This table compares InfraREIT and American Tower Corporation (REIT)’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
InfraREIT $184.70 million 5.31 $160.52 million $1.20 18.66
American Tower Corporation (REIT) $6.33 billion 9.41 $3.74 billion $2.49 55.76

American Tower Corporation (REIT) has higher revenue and earnings than InfraREIT. InfraREIT is trading at a lower price-to-earnings ratio than American Tower Corporation (REIT), indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for InfraREIT and American Tower Corporation (REIT), as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
InfraREIT 0 2 2 0 2.50
American Tower Corporation (REIT) 0 0 11 0 3.00

InfraREIT presently has a consensus target price of $23.00, suggesting a potential upside of 2.72%. American Tower Corporation (REIT) has a consensus target price of $146.80, suggesting a potential upside of 5.73%. Given American Tower Corporation (REIT)’s stronger consensus rating and higher possible upside, analysts clearly believe American Tower Corporation (REIT) is more favorable than InfraREIT.

Summary

American Tower Corporation (REIT) beats InfraREIT on 12 of the 17 factors compared between the two stocks.

About InfraREIT

InfraREIT, Inc. is a real estate investment trust. The Company is engaged in owning and leasing rate-regulated transmission and distribution (T&D) assets in Texas. It leases its T&D assets to Sharyland Utilities, L.P. Its assets are located in the Texas Panhandle near Amarillo, the Permian Basin in and around Stanton, Central Texas around Brady, Northeast Texas in and around Celeste and South Texas near McAllen. As of December 31, 2016, its T&D assets consisted of approximately 54,000 electricity delivery points, approximately 815 circuit miles of transmission lines, approximately 40,500 circuit miles of distribution lines, 57 substations and a 300 megawatt high-voltage direct current (DC) Tie between Texas and Mexico (Railroad DC Tie). As of December 31, 2016, its T&D assets in each of its leases included S/B/C Lease, McAllen Lease, competitive renewable energy zone (CREZ) Lease, Stanton Transmission Loop Lease and Electric Reliability Council of Texas (ERCOT) Transmission Lease.

About American Tower Corporation (REIT)

American Tower Corporation (ATC) is a holding company. The Company operates as a real estate investment trust (REIT), which owns, operates and develops multitenant communications real estate. ATC’s segments include U.S. property, Asia property, EMEA property, Latin America property, Services and Other. Its primary business is property operations, which include the leasing of space on communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities, and tenants in various other industries. Its U.S. property segment includes operations in the United States. Its Asia property segment includes operations in India. The EMEA property segment includes operations in Germany, Ghana, Nigeria, South Africa and Uganda. The Latin America property segment includes operations in Brazil, Chile, Colombia, Costa Rica, Mexico and Peru. Its services segment offers tower-related services in the United States.

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