AvalonBay Communities (NYSE:AVB) & Service Properties Trust (NASDAQ:SVC) Head to Head Comparison

Service Properties Trust (NASDAQ:SVC) and AvalonBay Communities (NYSE:AVB) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, valuation, profitability and risk.

Profitability

This table compares Service Properties Trust and AvalonBay Communities’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Service Properties Trust	-12.87%	-22.67%	-3.37%
AvalonBay Communities	37.13%	9.15%	5.15%

Dividends

Service Properties Trust pays an annual dividend of $0.04 per share and has a dividend yield of 1.4%. AvalonBay Communities pays an annual dividend of $7.00 per share and has a dividend yield of 3.2%. Service Properties Trust pays out -2.4% of its earnings in the form of a dividend. AvalonBay Communities pays out 92.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional & Insider Ownership

77.6% of Service Properties Trust shares are held by institutional investors. Comparatively, 92.6% of AvalonBay Communities shares are held by institutional investors. 1.4% of Service Properties Trust shares are held by company insiders. Comparatively, 0.4% of AvalonBay Communities shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Service Properties Trust has a beta of 2.19, suggesting that its share price is 119% more volatile than the S&P 500. Comparatively, AvalonBay Communities has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Service Properties Trust and AvalonBay Communities, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Service Properties Trust	1	0	1	0	2.00
AvalonBay Communities	0	7	8	0	2.53

Service Properties Trust currently has a consensus price target of $5.25, indicating a potential upside of 78.57%. AvalonBay Communities has a consensus price target of $238.64, indicating a potential upside of 8.57%. Given Service Properties Trust’s higher possible upside, equities research analysts clearly believe Service Properties Trust is more favorable than AvalonBay Communities.

Earnings & Valuation

This table compares Service Properties Trust and AvalonBay Communities”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Service Properties Trust	$1.90 billion	0.26	-$32.78 million	($1.67)	-1.76
AvalonBay Communities	$2.91 billion	10.73	$1.08 billion	$7.59	28.96

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

Summary

AvalonBay Communities beats Service Properties Trust on 12 of the 16 factors compared between the two stocks.

About Service Properties Trust

Service Properties Trust (Nasdaq: SVC) is a real estate investment trust with over $11 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of December 31, 2023, SVC owned 221 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of December 31, 2023, SVC also owned 752 service-focused retail net lease properties totaling approximately 13.3 million square feet throughout the United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of December 31, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA.

About AvalonBay Communities

AvalonBay Communities, Inc. is a real estate investment trust, which engages in the development, acquisition, ownership, and operation of multifamily communities. It operates through the following segments: Same Store, Other Stabilized, and Development or Redevelopment. The Same Store segment refers to the operating communities that were owned and had stabilized occupancy. The Other Stabilized segment includes all other complete communities that have stabilized occupancy. The Development or Redevelopment segment consists of communities that are under construction. The company was founded by Gilbert M. Meyer in 1978 and is headquartered in Arlington, VA.