istar (NYSE:STAR) and American Assets Trust (NYSE:AAT) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitability, earnings and institutional ownership.

Earnings and Valuation

This table compares istar and American Assets Trust’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
istar $679.20 million 1.11 $175.68 million $2.31 4.80
American Assets Trust $314.98 million 5.51 $40.13 million $1.92 19.14

istar has higher revenue and earnings than American Assets Trust. istar is trading at a lower price-to-earnings ratio than American Assets Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

istar pays an annual dividend of $0.36 per share and has a dividend yield of 3.2%. American Assets Trust pays an annual dividend of $1.08 per share and has a dividend yield of 2.9%. istar pays out 15.6% of its earnings in the form of a dividend. American Assets Trust pays out 56.3% 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. istar is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

istar has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, American Assets Trust has a beta of 0.32, indicating that its stock price is 68% less volatile than the S&P 500.

Institutional and Insider Ownership

82.7% of istar shares are owned by institutional investors. Comparatively, 94.4% of American Assets Trust shares are owned by institutional investors. 5.0% of istar shares are owned by insiders. Comparatively, 37.9% of American Assets Trust shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares istar and American Assets Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
istar 11.28% 9.50% 1.90%
American Assets Trust 5.70% 2.25% 0.84%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for istar and American Assets Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
istar 0 3 0 0 2.00
American Assets Trust 1 0 3 0 2.50

istar presently has a consensus target price of $14.00, suggesting a potential upside of 26.35%. American Assets Trust has a consensus target price of $40.75, suggesting a potential upside of 10.88%. Given istar’s higher probable upside, equities research analysts clearly believe istar is more favorable than American Assets Trust.

Summary

istar beats American Assets Trust on 10 of the 16 factors compared between the two stocks.

About istar

iStar (NYSE: STAR) finances, invests in and develops real estate and real estate related projects as part of its fully-integrated investment platform. Building on over two decades of experience and $40 billion of transactions, iStar brings uncommon capabilities and new ways of thinking to commercial real estate and adapts its investment strategy to changing market conditions. The Company is structured as a real estate investment trust ("REIT"), with a diversified portfolio focused on larger assets located in major metropolitan markets.

About American Assets Trust

American Assets Trust, Inc. (the ?company?) is a full service, vertically integrated and self-administered real estate investment trust, or REIT, headquartered in San Diego, California. The company has over 50 years of experience in acquiring, improving, developing and managing premier retail, office and residential properties throughout the United States in some of the nation's most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Oregon, Washington, Texas and Hawaii. The company's retail portfolio comprises approximately 3.2 million rentable square feet, and its office portfolio comprises approximately 2.6 million square feet. In addition, the company owns one mixed-use property (including approximately 97,000 rentable square feet of retail space and a 369-room all-suite hotel) and 2,112 multifamily units. In 2011, the company was formed to succeed to the real estate business of American Assets, Inc., a privately held corporation founded in 1967 and, as such, has significant experience, long-standing relationships and extensive knowledge of its core markets, submarkets and asset classes.

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