Critical Analysis: Saul Centers (NYSE:BFS) & Essential Properties Realty Trust (NYSE:EPRT)

Essential Properties Realty Trust (NYSE:EPRT) and Saul Centers (NYSE:BFS) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Profitability

This table compares Essential Properties Realty Trust and Saul Centers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Essential Properties Realty Trust	44.62%	6.13%	3.75%
Saul Centers	17.09%	14.69%	2.22%

Institutional & Insider Ownership

97.0% of Essential Properties Realty Trust shares are owned by institutional investors. Comparatively, 50.0% of Saul Centers shares are owned by institutional investors. 0.8% of Essential Properties Realty Trust shares are owned by company insiders. Comparatively, 56.6% of Saul Centers shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Essential Properties Realty Trust has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500. Comparatively, Saul Centers has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Essential Properties Realty Trust and Saul Centers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Essential Properties Realty Trust	0	3	10	0	2.77
Saul Centers	0	0	1	0	3.00

Essential Properties Realty Trust presently has a consensus price target of $34.98, indicating a potential upside of 12.78%. Saul Centers has a consensus price target of $45.50, indicating a potential upside of 35.96%. Given Saul Centers’ stronger consensus rating and higher probable upside, analysts clearly believe Saul Centers is more favorable than Essential Properties Realty Trust.

Valuation & Earnings

This table compares Essential Properties Realty Trust and Saul Centers”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Essential Properties Realty Trust	$449.61 million	13.63	$203.00 million	$1.15	26.97
Saul Centers	$268.85 million	3.01	$50.65 million	$1.47	22.77

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

Dividends

Essential Properties Realty Trust pays an annual dividend of $1.20 per share and has a dividend yield of 3.9%. Saul Centers pays an annual dividend of $2.36 per share and has a dividend yield of 7.1%. Essential Properties Realty Trust pays out 104.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Saul Centers pays out 160.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Essential Properties Realty Trust has raised its dividend for 6 consecutive years.

Summary

Essential Properties Realty Trust beats Saul Centers on 10 of the 16 factors compared between the two stocks.

About Essential Properties Realty Trust

Essential Properties Realty Trust, Inc., a real estate company, acquires, owns, and manages single-tenant properties in the United States. The company leases its properties to middle-market companies, such as restaurants, car washes, automotive services, medical and dental services, convenience stores, equipment rental, entertainment, early childhood education, grocery, and health and fitness on a long-term basis. As of December 31, 2021, it had a portfolio of 1, 451 properties. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2016 and is headquartered in Princeton, New Jersey.

About Saul Centers

Saul Centers is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio comprised of 61 properties that includes (a) 57 community and neighborhood Shopping Centers and Mixed-Use properties with approximately 9.8 million square feet of leasable area and (b) four land and development properties. Over 85% of the Company’s property operating income is generated from properties in the metropolitan Washington, DC/Baltimore area.