Altisource Residential Corporation (RESI) vs. Preferred Apartment Communities (APTS) Critical Review

Altisource Residential Corporation (NYSE: RESI) and Preferred Apartment Communities (NASDAQ:APTS) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.

Valuation and Earnings

This table compares Altisource Residential Corporation and Preferred Apartment Communities’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Altisource Residential Corporation $59.21 million 9.85 -$88.76 million ($4.16) -2.63
Preferred Apartment Communities $249.98 million 2.64 $142.18 million N/A N/A

Preferred Apartment Communities has higher revenue and earnings than Altisource Residential Corporation.

Profitability

This table compares Altisource Residential Corporation and Preferred Apartment Communities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Altisource Residential Corporation -378.17% -21.82% -8.37%
Preferred Apartment Communities 4.66% -4.73% 0.51%

Analyst Recommendations

This is a breakdown of recent ratings for Altisource Residential Corporation and Preferred Apartment Communities, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Altisource Residential Corporation 0 4 4 0 2.50
Preferred Apartment Communities 0 1 3 0 2.75

Altisource Residential Corporation presently has a consensus target price of $15.57, indicating a potential upside of 42.47%. Preferred Apartment Communities has a consensus target price of $17.63, indicating a potential downside of 10.89%. Given Altisource Residential Corporation’s higher possible upside, analysts plainly believe Altisource Residential Corporation is more favorable than Preferred Apartment Communities.

Insider & Institutional Ownership

73.5% of Altisource Residential Corporation shares are owned by institutional investors. 0.5% of Altisource Residential Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Altisource Residential Corporation pays an annual dividend of $0.60 per share and has a dividend yield of 5.5%. Preferred Apartment Communities does not pay a dividend. Altisource Residential Corporation pays out -14.4% of its earnings in the form of a dividend. Preferred Apartment Communities has increased its dividend for 3 consecutive years.

Altisource Residential Corporation Company Profile

Altisource Residential Corporation is a real estate investment trust (REIT). The Company focuses on acquiring, owning and managing single-family rental (SFR) properties throughout the United States. The Company conducts its activities through its subsidiary, Altisource Residential, L.P., and its subsidiaries. The Company also converts a portion of the real estate owned (REO) properties that it acquires through resolution of its mortgage loans into SFR properties. The Company has also entered into property management service agreements with two third-party property managers: Altisource Portfolio Solutions, SA (ASPS) and Main Street Renewal, LLC (MSR), to provide, among other things, leasing and lease management, operations, maintenance, repair and property management services in respect of its SFR portfolios. As of December 31, 2016, the Company had 10,533 properties, consisting of 9,939 properties held for use and 594 held for sale.

Preferred Apartment Communities Company Profile

Preferred Apartment Communities, Inc. is a real estate investment trust (REIT). The Company is formed to acquire and operate multifamily properties in select targeted markets throughout the United States. It operates through segments, including multifamily communities, real estate related financing, new market properties and office buildings. The multifamily communities segment consists of its portfolio of owned residential multifamily communities. The real estate related financing segment consists of the Company’s portfolio of real estate loans, bridge loans, and other instruments deployed by it to partially finance the development, construction, and prestabilization carrying costs of new multifamily communities and other real estate and real estate related assets. The new market properties segment consists of its portfolio of grocery-anchored shopping centers. The office buildings segment consists of its three office buildings located in Atlanta, Georgia and Birmingham, Alabama.

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