Armada Hoffler Properties (NYSE:AHH) versus Sun Communities (NYSE:SUI) Critical Review

Sun Communities (NYSE:SUI) and Armada Hoffler Properties (NYSE:AHH) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, earnings, risk, valuation, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares Sun Communities and Armada Hoffler Properties”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sun Communities	$2.31 billion	7.30	$101.80 million	$10.74	12.73
Armada Hoffler Properties	$285.20 million	2.27	$3.70 million	($0.08)	-78.06

Sun Communities has higher revenue and earnings than Armada Hoffler Properties. Armada Hoffler Properties is trading at a lower price-to-earnings ratio than Sun Communities, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Sun Communities has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500. Comparatively, Armada Hoffler Properties has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.

Dividends

Sun Communities pays an annual dividend of $4.16 per share and has a dividend yield of 3.0%. Armada Hoffler Properties pays an annual dividend of $0.56 per share and has a dividend yield of 9.0%. Sun Communities pays out 38.7% of its earnings in the form of a dividend. Armada Hoffler Properties pays out -700.0% 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. Sun Communities has increased its dividend for 8 consecutive years. Armada Hoffler Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and price targets for Sun Communities and Armada Hoffler Properties, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sun Communities	1	6	7	0	2.43
Armada Hoffler Properties	2	1	1	1	2.20

Sun Communities presently has a consensus price target of $138.77, indicating a potential upside of 1.51%. Armada Hoffler Properties has a consensus price target of $7.80, indicating a potential upside of 24.90%. Given Armada Hoffler Properties’ higher possible upside, analysts clearly believe Armada Hoffler Properties is more favorable than Sun Communities.

Institutional & Insider Ownership

99.6% of Sun Communities shares are owned by institutional investors. Comparatively, 66.4% of Armada Hoffler Properties shares are owned by institutional investors. 1.8% of Sun Communities shares are owned by insiders. Comparatively, 10.2% of Armada Hoffler Properties shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Sun Communities and Armada Hoffler Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sun Communities	61.86%	-0.04%	-0.02%
Armada Hoffler Properties	0.95%	0.29%	0.08%

Summary

Sun Communities beats Armada Hoffler Properties on 10 of the 18 factors compared between the two stocks.

About Sun Communities

Established in 1975, Sun Communities, Inc. became a publicly owned corporation in December 1993. The Company is a fully integrated REIT listed on the New York Stock Exchange under the symbol: SUI. As of December 31, 2023, the Company owned, operated, or had an interest in a portfolio of 667 developed MH, RV and Marina properties comprising 179,310 developed sites and approximately 48,030 wet slips and dry storage spaces in the U.S., the UK and Canada.

About Armada Hoffler Properties

Armada Hoffler Properties, Inc. (the “Company”) is a vertically integrated, self-managed real estate investment trust (“REIT”) with over four decades of experience developing, building, acquiring, and managing high-quality retail, office, and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. In addition to the ownership of the Company’s operating property portfolio, the Company develops and builds properties for its own account and through joint ventures between the Company and unaffiliated partners and also invests in development projects through real estate financing arrangements. The Company also provides general construction and development services to third-party clients. The Company’s construction and development experience includes mid- and high-rise office buildings, retail strip malls, retail power centers, multifamily apartment communities, hotels and conference centers, single- and multi-tenant industrial, distribution, and manufacturing facilities, educational, medical, and special purpose facilities, government projects, parking garages, and mixed-use town centers. The Company is the sole general partner of Armada Hoffler, L.P. (the “Operating Partnership”) and, as of March 31, 2024, owned 75.5% of the economic interest in the Operating Partnership, of which 0.1% is held as general partnership units. The operations of the Company are conducted primarily through the Operating Partnership and the wholly owned subsidiaries thereof.