Financial Analysis: Innovative Industrial Properties (NYSE:IIPR) and Extra Space Storage (NYSE:EXR)

Innovative Industrial Properties (NYSE:IIPR) and Extra Space Storage (NYSE:EXR) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, valuation, profitability and institutional ownership.

Profitability

This table compares Innovative Industrial Properties and Extra Space Storage’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Innovative Industrial Properties	45.80%	6.77%	5.40%
Extra Space Storage	28.40%	6.56%	3.31%

Earnings & Valuation

This table compares Innovative Industrial Properties and Extra Space Storage”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Innovative Industrial Properties	$308.52 million	4.53	$161.66 million	$4.22	11.83
Extra Space Storage	$3.26 billion	9.15	$854.68 million	$4.48	31.34

Extra Space Storage has higher revenue and earnings than Innovative Industrial Properties. Innovative Industrial Properties is trading at a lower price-to-earnings ratio than Extra Space Storage, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Innovative Industrial Properties and Extra Space Storage, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Innovative Industrial Properties	3	2	1	0	1.67
Extra Space Storage	0	11	6	0	2.35

Innovative Industrial Properties currently has a consensus price target of $68.20, suggesting a potential upside of 36.65%. Extra Space Storage has a consensus price target of $146.27, suggesting a potential upside of 4.16%. Given Innovative Industrial Properties’ higher probable upside, equities research analysts clearly believe Innovative Industrial Properties is more favorable than Extra Space Storage.

Insider & Institutional Ownership

70.6% of Innovative Industrial Properties shares are owned by institutional investors. Comparatively, 99.1% of Extra Space Storage shares are owned by institutional investors. 2.0% of Innovative Industrial Properties shares are owned by company insiders. Comparatively, 1.4% of Extra Space Storage shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Innovative Industrial Properties pays an annual dividend of $7.60 per share and has a dividend yield of 15.2%. Extra Space Storage pays an annual dividend of $6.48 per share and has a dividend yield of 4.6%. Innovative Industrial Properties pays out 180.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Extra Space Storage pays out 144.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Innovative Industrial Properties has increased its dividend for 4 consecutive years and Extra Space Storage has increased its dividend for 1 consecutive years. Innovative Industrial Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Innovative Industrial Properties has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500. Comparatively, Extra Space Storage has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500.

Summary

Extra Space Storage beats Innovative Industrial Properties on 9 of the 17 factors compared between the two stocks.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017.

About Extra Space Storage

Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a self-administered and self-managed REIT and a member of the S&P 500. As of December 31, 2023, the Company owned and/or operated 3,714 self-storage stores in 42 states and Washington, D.C. The Company's stores comprise approximately 2.6 million units and approximately 283.0 million square feet of rentable space operating under the Extra Space, Life Storage and Storage Express brands. The Company offers customers a wide selection of conveniently located and secure storage units across the country, including boat storage, RV storage and business storage. It is the largest operator of self-storage properties in the United States.