Pennsylvania Real Estate Investment Trust (NYSE: PEI) and General Growth Properties (NYSE:GGP) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, institutional ownership, earnings and dividends.

Profitability

This table compares Pennsylvania Real Estate Investment Trust and General Growth Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pennsylvania Real Estate Investment Trust -18.13% -9.06% -2.66%
General Growth Properties 50.01% 13.57% 5.07%

Risk and Volatility

Pennsylvania Real Estate Investment Trust has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500. Comparatively, General Growth Properties has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500.

Insider & Institutional Ownership

99.3% of Pennsylvania Real Estate Investment Trust shares are owned by institutional investors. Comparatively, 95.3% of General Growth Properties shares are owned by institutional investors. 4.4% of Pennsylvania Real Estate Investment Trust shares are owned by company insiders. Comparatively, 35.6% of General Growth Properties shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Pennsylvania Real Estate Investment Trust and General Growth Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pennsylvania Real Estate Investment Trust 1 6 0 0 1.86
General Growth Properties 1 4 5 0 2.40

Pennsylvania Real Estate Investment Trust presently has a consensus price target of $14.17, suggesting a potential upside of 39.03%. General Growth Properties has a consensus price target of $26.70, suggesting a potential upside of 25.94%. Given Pennsylvania Real Estate Investment Trust’s higher probable upside, equities research analysts plainly believe Pennsylvania Real Estate Investment Trust is more favorable than General Growth Properties.

Valuation & Earnings

This table compares Pennsylvania Real Estate Investment Trust and General Growth Properties’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pennsylvania Real Estate Investment Trust $392.34 million 1.81 $217.76 million ($1.31) -7.78
General Growth Properties $2.51 billion 7.44 $1.76 billion $1.19 17.82

General Growth Properties has higher revenue and earnings than Pennsylvania Real Estate Investment Trust. Pennsylvania Real Estate Investment Trust is trading at a lower price-to-earnings ratio than General Growth Properties, indicating that it is currently the more affordable of the two stocks.

Dividends

Pennsylvania Real Estate Investment Trust pays an annual dividend of $0.84 per share and has a dividend yield of 8.2%. General Growth Properties pays an annual dividend of $0.88 per share and has a dividend yield of 4.2%. Pennsylvania Real Estate Investment Trust pays out -64.1% of its earnings in the form of a dividend. General Growth Properties pays out 73.9% 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. Pennsylvania Real Estate Investment Trust has increased its dividend for 5 consecutive years and General Growth Properties has increased its dividend for 5 consecutive years. Pennsylvania Real Estate Investment Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

General Growth Properties beats Pennsylvania Real Estate Investment Trust on 11 of the 16 factors compared between the two stocks.

Pennsylvania Real Estate Investment Trust Company Profile

Pennsylvania Real Estate Investment Trust (PREIT) is a self-managed and self-administered real estate investment trust (REIT). The Company’s primary business is owning and operating retail shopping malls, which it does primarily through operating partnership, PREIT Associates, L.P. (PREIT Associates). The Company is engaged in the ownership, management, leasing, acquisition, redevelopment, development and disposition of shopping malls. The Company has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region. As of December 31, 2016, the Company owned interests in 30 retail properties, of which 26 are operating properties and four are development or redevelopment properties. As of December 31, 2016, the Company’s 26 operating properties included 22 shopping malls and four other retail properties, had a total of 21.7 million square feet and were located in nine states.

General Growth Properties Company Profile

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.

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