Pennsylvania Real Estate Investment Trust (NYSE: PEI) and Macerich (NYSE:MAC) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, earnings, institutional ownership and dividends.

Risk & Volatility

Pennsylvania Real Estate Investment Trust has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500. Comparatively, Macerich has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Dividends

Pennsylvania Real Estate Investment Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.6%. Macerich pays an annual dividend of $2.96 per share and has a dividend yield of 4.5%. Pennsylvania Real Estate Investment Trust pays out -67.7% of its earnings in the form of a dividend. Macerich pays out 281.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pennsylvania Real Estate Investment Trust has increased its dividend for 6 consecutive years and Macerich has increased its dividend for 5 consecutive years. Pennsylvania Real Estate Investment Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Pennsylvania Real Estate Investment Trust and Macerich’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pennsylvania Real Estate Investment Trust -16.35% -7.60% -2.34%
Macerich 14.92% 3.56% 1.55%

Earnings and Valuation

This table compares Pennsylvania Real Estate Investment Trust and Macerich’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pennsylvania Real Estate Investment Trust $399.95 million 1.93 -$11.34 million ($1.24) -8.90
Macerich $1.04 billion 8.90 $516.99 million $1.05 62.72

Macerich 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 Macerich, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Pennsylvania Real Estate Investment Trust and Macerich, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pennsylvania Real Estate Investment Trust 1 6 0 0 1.86
Macerich 2 8 6 0 2.25

Pennsylvania Real Estate Investment Trust currently has a consensus price target of $13.83, suggesting a potential upside of 25.30%. Macerich has a consensus price target of $66.78, suggesting a potential upside of 1.40%. Given Pennsylvania Real Estate Investment Trust’s higher possible upside, analysts plainly believe Pennsylvania Real Estate Investment Trust is more favorable than Macerich.

Institutional & Insider Ownership

97.7% of Pennsylvania Real Estate Investment Trust shares are owned by institutional investors. Comparatively, 97.6% of Macerich shares are owned by institutional investors. 4.4% of Pennsylvania Real Estate Investment Trust shares are owned by insiders. Comparatively, 3.8% of Macerich shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Macerich beats Pennsylvania Real Estate Investment Trust on 10 of the 17 factors compared between the two stocks.

About Pennsylvania Real Estate Investment Trust

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.

About Macerich

The Macerich Company is a self-administered and self-managed real estate investment trust (REIT). The Company is involved in the acquisition, ownership, development, redevelopment, management and leasing of regional and community/power shopping centers located throughout the United States. The Company owns ownership interests in, The Macerich Partnership, L.P. (the Operating Partnership). As of December 31, 2016, the Company, through its operating partnership, had ownership interests in 50 regional shopping centers and seven community/power shopping centers. These 57 regional and community/power shopping centers consisted of approximately 56 million square feet of gross leasable area (GLA), as of December 31, 2016. The Company’s properties include Danbury Fair Mall, Desert Sky Mall, Fresno Fashion Fair, NorthPark Mall, Oaks, The, Towne Mall, Valley Mall, Arrowhead Towne Center, Deptford Mall and South Plains Mall.

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