Simon Property Group (SPG) vs. Pennsylvania Real Estate Investment Trust (NYSE:PEI) Critical Contrast

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

Profitability

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

Net Margins Return on Equity Return on Assets
Simon Property Group 31.96% 41.85% 6.09%
Pennsylvania Real Estate Investment Trust -16.35% -7.60% -2.34%

Volatility and Risk

Simon Property Group has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, 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.

Insider & Institutional Ownership

47.5% of Simon Property Group shares are owned by institutional investors. 8.4% of Simon Property Group shares are owned by company insiders. Comparatively, 4.4% of Pennsylvania Real Estate Investment Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Simon Property Group and Pennsylvania Real Estate Investment Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Simon Property Group $5.44 billion 19.43 $1.84 billion $5.66 29.16
Pennsylvania Real Estate Investment Trust $399.95 million 2.00 -$11.34 million ($1.24) -9.21

Simon Property Group 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 Simon Property Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Simon Property Group pays an annual dividend of $7.40 per share and has a dividend yield of 4.5%. Pennsylvania Real Estate Investment Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.4%. Simon Property Group pays out 130.7% 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 pays out -67.7% of its earnings in the form of a dividend. Pennsylvania Real Estate Investment Trust has increased its dividend for 8 consecutive years. Pennsylvania Real Estate Investment Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Simon Property Group and Pennsylvania Real Estate Investment Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Simon Property Group 0 5 11 0 2.69
Pennsylvania Real Estate Investment Trust 1 6 0 0 1.86

Simon Property Group currently has a consensus target price of $191.88, suggesting a potential upside of 16.26%. Pennsylvania Real Estate Investment Trust has a consensus target price of $13.83, suggesting a potential upside of 21.13%. Given Pennsylvania Real Estate Investment Trust’s higher possible upside, analysts clearly believe Pennsylvania Real Estate Investment Trust is more favorable than Simon Property Group.

Summary

Simon Property Group beats Pennsylvania Real Estate Investment Trust on 12 of the 17 factors compared between the two stocks.

About Simon Property Group

Simon Property Group, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company owns, develops and manages retail real estate properties, which consist primarily of malls, Premium Outlets and The Mills. Simon Property Group, L.P. (Operating Partnership), is the Company’s partnership subsidiary that owns all of its real estate properties and other assets. As of December 31, 2016, the Company owned or held an interest in 206 income-producing properties in the United States, which consisted of 108 malls, 67 Premium Outlets, 14 Mills, four lifestyle centers, and 13 other retail properties in 37 states and Puerto Rico. As of December 31, 2016, it had redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants, underway at 27 properties in the United States and it had one outlet and one other retail project under development.

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.

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