Analyzing Armada Hoffler Properties (NYSE:AHH) and AvalonBay Communities (NYSE:AVB)

Armada Hoffler Properties (NYSE:AHH) and AvalonBay Communities (NYSE:AVB) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, institutional ownership, analyst recommendations, risk, valuation, dividends and profitability.

Analyst Ratings

This is a breakdown of recent ratings for Armada Hoffler Properties and AvalonBay Communities, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Armada Hoffler Properties	1	2	2	0	2.20
AvalonBay Communities	0	12	5	0	2.29

Armada Hoffler Properties presently has a consensus price target of $8.38, suggesting a potential upside of 22.26%. AvalonBay Communities has a consensus price target of $217.46, suggesting a potential upside of 15.89%. Given Armada Hoffler Properties’ higher possible upside, analysts clearly believe Armada Hoffler Properties is more favorable than AvalonBay Communities.

Volatility & Risk

Armada Hoffler Properties has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500. Comparatively, AvalonBay Communities has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500.

Institutional and Insider Ownership

66.4% of Armada Hoffler Properties shares are owned by institutional investors. Comparatively, 92.6% of AvalonBay Communities shares are owned by institutional investors. 11.9% of Armada Hoffler Properties shares are owned by insiders. Comparatively, 0.5% of AvalonBay Communities shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Armada Hoffler Properties pays an annual dividend of $0.56 per share and has a dividend yield of 8.2%. AvalonBay Communities pays an annual dividend of $7.00 per share and has a dividend yield of 3.7%. Armada Hoffler Properties pays out 466.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AvalonBay Communities pays out 86.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AvalonBay Communities has raised its dividend for 3 consecutive years.

Profitability

This table compares Armada Hoffler Properties and AvalonBay Communities’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Armada Hoffler Properties	4.39%	3.40%	0.95%
AvalonBay Communities	38.91%	9.70%	5.45%

Valuation & Earnings

This table compares Armada Hoffler Properties and AvalonBay Communities”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Armada Hoffler Properties	$708.47 million	1.00	$35.65 million	$0.12	57.08
AvalonBay Communities	$2.91 billion	9.17	$1.08 billion	$8.12	23.11

AvalonBay Communities has higher revenue and earnings than Armada Hoffler Properties. AvalonBay Communities is trading at a lower price-to-earnings ratio than Armada Hoffler Properties, indicating that it is currently the more affordable of the two stocks.

Summary

AvalonBay Communities beats Armada Hoffler Properties on 12 of the 17 factors compared between the two stocks.

About Armada Hoffler Properties

Armada Hoffler Properties, Inc. (the “Company”) is a vertically integrated, self-managed real estate investment trust (“REIT”) with over four decades of experience developing, building, acquiring, and managing high-quality retail, office, and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. In addition to the ownership of the Company’s operating property portfolio, the Company develops and builds properties for its own account and through joint ventures between the Company and unaffiliated partners and also invests in development projects through real estate financing arrangements. The Company also provides general construction and development services to third-party clients. The Company’s construction and development experience includes mid- and high-rise office buildings, retail strip malls, retail power centers, multifamily apartment communities, hotels and conference centers, single- and multi-tenant industrial, distribution, and manufacturing facilities, educational, medical, and special purpose facilities, government projects, parking garages, and mixed-use town centers. The Company is the sole general partner of Armada Hoffler, L.P. (the “Operating Partnership”) and, as of March 31, 2024, owned 75.5% of the economic interest in the Operating Partnership, of which 0.1% is held as general partnership units. The operations of the Company are conducted primarily through the Operating Partnership and the wholly owned subsidiaries thereof.

About AvalonBay Communities

AvalonBay Communities, Inc. is a real estate investment trust, which engages in the development, acquisition, ownership, and operation of multifamily communities. It operates through the following segments: Same Store, Other Stabilized, and Development or Redevelopment. The Same Store segment refers to the operating communities that were owned and had stabilized occupancy. The Other Stabilized segment includes all other complete communities that have stabilized occupancy. The Development or Redevelopment segment consists of communities that are under construction. The company was founded by Gilbert M. Meyer in 1978 and is headquartered in Arlington, VA.