Comparing American Assets Trust (AAT) and Lexington Realty Trust (LXP)

American Assets Trust (NYSE: AAT) and Lexington Realty Trust (NYSE:LXP) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.

Institutional & Insider Ownership

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99.1% of American Assets Trust shares are held by institutional investors. Comparatively, 75.0% of Lexington Realty Trust shares are held by institutional investors. 34.2% of American Assets Trust shares are held by company insiders. Comparatively, 3.1% of Lexington Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

American Assets Trust pays an annual dividend of $1.08 per share and has a dividend yield of 3.3%. Lexington Realty Trust pays an annual dividend of $0.71 per share and has a dividend yield of 9.0%. American Assets Trust pays out 174.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lexington Realty Trust pays out 215.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Assets Trust has raised its dividend for 7 consecutive years.

Valuation and Earnings

This table compares American Assets Trust and Lexington Realty Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Assets Trust $314.98 million 4.83 $40.13 million $0.62 52.02
Lexington Realty Trust $391.64 million 4.83 $85.58 million $0.33 23.79

Lexington Realty Trust has higher revenue and earnings than American Assets Trust. Lexington Realty Trust is trading at a lower price-to-earnings ratio than American Assets Trust, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

American Assets Trust has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500. Comparatively, Lexington Realty Trust has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500.

Profitability

This table compares American Assets Trust and Lexington Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Assets Trust 10.16% 3.76% 1.45%
Lexington Realty Trust 21.84% 6.64% 2.45%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for American Assets Trust and Lexington Realty Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Assets Trust 1 0 3 0 2.50
Lexington Realty Trust 1 7 0 0 1.88

American Assets Trust presently has a consensus target price of $43.25, indicating a potential upside of 34.11%. Lexington Realty Trust has a consensus target price of $10.13, indicating a potential upside of 28.98%. Given American Assets Trust’s stronger consensus rating and higher probable upside, analysts clearly believe American Assets Trust is more favorable than Lexington Realty Trust.

Summary

American Assets Trust beats Lexington Realty Trust on 10 of the 17 factors compared between the two stocks.

American Assets Trust Company Profile

American Assets Trust, Inc. is a full service, vertically integrated and self-administered real estate investment trust (REIT). The Company owns, operates, acquires and develops retail, office, multifamily and mixed-use properties in Southern California, Northern California, Oregon, Washington, Texas and Hawaii markets. The Company operates in four business segments: retail, office, multifamily and mixed-use. As of December 31, 2016, the Company’s portfolio consisted of 11 retail shopping centers; seven office properties; a mixed-use property consisting of a 369-room all-suite hotel and a retail shopping center, and five multifamily properties. Additionally, as of December 31, 2016, the Company owned land at four of its properties that it classified as held for development and construction in progress. The Company’s markets include San Diego, the San Francisco Bay Area, Portland, Oregon, Bellevue, Washington and Oahu, Hawaii.

Lexington Realty Trust Company Profile

Lexington Realty Trust is a real estate investment trust (REIT). The Company owns a portfolio of equity and debt investments in single-tenant commercial properties. As of December 31, 2016, the Company had equity ownership interests in approximately 195 consolidated real estate properties, located in 40 states and containing an aggregate of approximately 43.3 million square feet of space, approximately 96.0% of which was leased. The Company conducts its operations either directly or indirectly through property owner subsidiaries and lender subsidiaries, which are single purpose entities; an operating partnership, Lepercq Corporate Income Fund L.P. (LCIF), in which the Company is the sole unit holder of the general partner and the sole unit holder of the limited partner that holds a majority of the limited partner interests; Lexington Realty Advisors, Inc. (LRA), a subsidiary of the Company, and investments in joint ventures.

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