Critical Comparison: Mid-America Apartment Communities (NYSE:MAA) versus MFA Financial (NYSE:MFA)

Mid-America Apartment Communities (NYSE:MAAGet Rating) and MFA Financial (NYSE:MFAGet Rating) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, profitability, institutional ownership, dividends and risk.

Dividends

Mid-America Apartment Communities pays an annual dividend of $4.35 per share and has a dividend yield of 2.4%. MFA Financial pays an annual dividend of $1.76 per share and has a dividend yield of 12.0%. Mid-America Apartment Communities pays out 84.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MFA Financial pays out 166.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mid-America Apartment Communities has increased its dividend for 13 consecutive years.

Institutional and Insider Ownership

93.1% of Mid-America Apartment Communities shares are held by institutional investors. 1.3% of Mid-America Apartment Communities shares are held by insiders. Comparatively, 0.6% of MFA Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

Mid-America Apartment Communities has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, MFA Financial has a beta of 1.61, indicating that its share price is 61% more volatile than the S&P 500.

Profitability

This table compares Mid-America Apartment Communities and MFA Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mid-America Apartment Communities 32.66% 9.77% 5.31%
MFA Financial 41.39% 10.55% 3.04%

Valuation & Earnings

This table compares Mid-America Apartment Communities and MFA Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mid-America Apartment Communities $1.78 billion 11.98 $533.79 million $5.16 35.77
MFA Financial $362.30 million 4.14 $328.87 million $1.06 13.81

Mid-America Apartment Communities has higher revenue and earnings than MFA Financial. MFA Financial is trading at a lower price-to-earnings ratio than Mid-America Apartment Communities, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations and price targets for Mid-America Apartment Communities and MFA Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mid-America Apartment Communities 0 5 6 0 2.55
MFA Financial 0 2 2 0 2.50

Mid-America Apartment Communities presently has a consensus price target of $211.45, indicating a potential upside of 14.58%. MFA Financial has a consensus price target of $19.00, indicating a potential upside of 29.78%. Given MFA Financial’s higher probable upside, analysts clearly believe MFA Financial is more favorable than Mid-America Apartment Communities.

Summary

Mid-America Apartment Communities beats MFA Financial on 12 of the 17 factors compared between the two stocks.

Mid-America Apartment Communities Company Profile (Get Rating)

MAA, an S&P 500 company, is a real estate investment trust, or REIT, focused on delivering full-cycle and superior investment performance for shareholders through the ownership, management, acquisition, development and redevelopment of quality apartment communities in the Southeast, Southwest, and Mid-Atlantic regions of the United States. As of December 31, 2020, MAA had ownership interest in 102,772 apartment units, including communities currently in development, across 16 states and the District of Columbia.

MFA Financial Company Profile (Get Rating)

MFA Financial, Inc., together with its subsidiaries, operates as a real estate investment trust (REIT) in the United States. The company invests in residential mortgage assets, including non-agency mortgage-backed securities (MBS), agency MBS, and credit risk transfer securities; residential whole loans, including purchased performing loans, purchased credit deteriorated, and non-performing loans; and mortgage servicing rights related assets. The company has elected to be taxed as a REIT and would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. MFA Financial, Inc. was incorporated in 1997 and is headquartered in New York, New York.

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