Critical Analysis: Safety Income & Growth (SAFE) & Arbor Realty Trust (ABR)

Arbor Realty Trust (NYSE: ABR) and Safety Income & Growth (NYSE:SAFE) are both small-cap financials companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, dividends, risk, profitability, analyst recommendations and institutional ownership.

Analyst Ratings

This is a breakdown of current ratings and price targets for Arbor Realty Trust and Safety Income & Growth, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arbor Realty Trust 0 2 1 0 2.33
Safety Income & Growth 0 5 1 0 2.17

Arbor Realty Trust presently has a consensus target price of $8.75, indicating a potential upside of 2.34%. Safety Income & Growth has a consensus target price of $20.58, indicating a potential upside of 14.78%. Given Safety Income & Growth’s higher probable upside, analysts plainly believe Safety Income & Growth is more favorable than Arbor Realty Trust.

Profitability

This table compares Arbor Realty Trust and Safety Income & Growth’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arbor Realty Trust 57.54% 11.61% 2.77%
Safety Income & Growth N/A N/A N/A

Insider and Institutional Ownership

45.7% of Arbor Realty Trust shares are held by institutional investors. Comparatively, 40.3% of Safety Income & Growth shares are held by institutional investors. 16.5% of Arbor Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Arbor Realty Trust pays an annual dividend of $0.76 per share and has a dividend yield of 8.9%. Safety Income & Growth pays an annual dividend of $0.15 per share and has a dividend yield of 0.8%. Arbor Realty Trust pays out 75.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Safety Income & Growth has increased its dividend for 5 consecutive years.

Earnings and Valuation

This table compares Arbor Realty Trust and Safety Income & Growth’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arbor Realty Trust $116.17 million 4.54 $50.34 million $1.01 8.47
Safety Income & Growth $21.74 million 15.00 $6.61 million N/A N/A

Arbor Realty Trust has higher revenue and earnings than Safety Income & Growth.

Summary

Arbor Realty Trust beats Safety Income & Growth on 9 of the 13 factors compared between the two stocks.

About Arbor Realty Trust

Arbor Realty Trust, Inc. is a real estate investment trust. The Company invests in a portfolio of structured finance assets in the multifamily and commercial real estate markets, primarily consisting of bridge and mezzanine loans, including junior participating interests in first mortgages, preferred and direct equity. Its segments include Structured Business and Agency Business. In addition, the Company may also directly acquire real property and invest in real estate-related notes and certain mortgage-related securities. It focuses on investment types, such as Bridge Financing, Mezzanine Financing, Junior Participation Financing and Preferred Equity Investments. It offers bridge financing products to borrowers, typically seeking short-term capital to use in an acquisition of property. It offers mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction.

About Safety Income & Growth

Safety, Income and Growth, Inc. is formed primarily to acquire, own, manage, finance and capitalize ground net leases (GNLs). The Company’s portfolio consists of 12 properties, which includes Doubletree Seattle Airport, One Ally Center, Hilton Salt Lake, Doubletree Mission Valley, Doubletree Sonoma, Doubletree Durango, Dallas Market Center: Sheraton Suites, Northside Forsyth Hospital Medical Center, NASA/JPSS Headquarters, The Buckler Apartments, Dallas Market Center: Marriott Courtyard and Lock Up Self Storage Facility.

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