Critical Review: Extra Space Storage (NYSE:EXR) & Service Properties Trust (NASDAQ:SVC)

Extra Space Storage (NYSE:EXR) and Service Properties Trust (NASDAQ:SVC) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, valuation, profitability, analyst recommendations, earnings, institutional ownership and dividends.

Institutional & Insider Ownership

99.1% of Extra Space Storage shares are held by institutional investors. Comparatively, 77.6% of Service Properties Trust shares are held by institutional investors. 1.0% of Extra Space Storage shares are held by company insiders. Comparatively, 1.6% of Service Properties Trust shares are held 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.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Extra Space Storage and Service Properties Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Extra Space Storage	0	10	6	0	2.38
Service Properties Trust	2	1	3	0	2.17

Extra Space Storage currently has a consensus price target of $146.27, suggesting a potential downside of 1.42%. Service Properties Trust has a consensus price target of $12.81, suggesting a potential upside of 48.98%. Given Service Properties Trust’s higher probable upside, analysts clearly believe Service Properties Trust is more favorable than Extra Space Storage.

Valuation and Earnings

This table compares Extra Space Storage and Service Properties Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Extra Space Storage	$3.41 billion	9.18	$974.00 million	$4.46	33.27
Service Properties Trust	$1.81 billion	0.61	-$202.32 million	($7.10)	-1.21

Extra Space Storage has higher revenue and earnings than Service Properties Trust. Service Properties Trust 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.

Risk & Volatility

Extra Space Storage has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500. Comparatively, Service Properties Trust has a beta of 1.65, suggesting that its share price is 65% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Extra Space Storage	27.66%	6.65%	3.28%
Service Properties Trust	-13.59%	-38.18%	-3.58%

Dividends

Extra Space Storage pays an annual dividend of $6.48 per share and has a dividend yield of 4.4%. Service Properties Trust pays an annual dividend of $0.20 per share and has a dividend yield of 2.3%. Extra Space Storage pays out 145.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Service Properties Trust pays out -2.8% of its earnings in the form of a dividend. Extra Space Storage has increased its dividend for 1 consecutive years. Extra Space Storage is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Extra Space Storage beats Service Properties Trust on 13 of the 17 factors compared between the two stocks.

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.

About Service Properties Trust

Service Properties Trust (Nasdaq: SVC) is a real estate investment trust with over $11 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of December 31, 2023, SVC owned 221 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of December 31, 2023, SVC also owned 752 service-focused retail net lease properties totaling approximately 13.3 million square feet throughout the United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of December 31, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA.