Critical Analysis: Armada Hoffler Properties (NYSE:AHH) versus Elme Communities (NYSE:ELME)

Elme Communities (NYSE:ELME) and Armada Hoffler Properties (NYSE:AHH) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, dividends, analyst recommendations, earnings, institutional ownership, risk and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Elme Communities	-5.78%	-1.33%	-0.78%
Armada Hoffler Properties	4.39%	3.40%	0.95%

Analyst Recommendations

This is a summary of current ratings and price targets for Elme Communities and Armada Hoffler Properties, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Elme Communities	0	3	1	0	2.25
Armada Hoffler Properties	0	1	2	0	2.67

Elme Communities currently has a consensus price target of $18.50, suggesting a potential upside of 9.69%. Armada Hoffler Properties has a consensus price target of $8.8333, suggesting a potential upside of 27.56%. Given Armada Hoffler Properties’ stronger consensus rating and higher probable upside, analysts plainly believe Armada Hoffler Properties is more favorable than Elme Communities.

Dividends

Elme Communities pays an annual dividend of $0.72 per share and has a dividend yield of 4.3%. Armada Hoffler Properties pays an annual dividend of $0.56 per share and has a dividend yield of 8.1%. Elme Communities pays out -480.0% of its earnings in the form of a dividend. 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.

Institutional & Insider Ownership

87.9% of Elme Communities shares are held by institutional investors. Comparatively, 66.3% of Armada Hoffler Properties shares are held by institutional investors. 1.4% of Elme Communities shares are held by company insiders. Comparatively, 10.2% of Armada Hoffler Properties shares are held by company 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.

Risk & Volatility

Elme Communities has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Armada Hoffler Properties has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500.

Earnings and Valuation

This table compares Elme Communities and Armada Hoffler Properties”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Elme Communities	$241.93 million	6.15	-$13.10 million	($0.15)	-112.43
Armada Hoffler Properties	$546.16 million	1.31	$35.65 million	$0.12	57.71

Armada Hoffler Properties has higher revenue and earnings than Elme Communities. Elme 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

Armada Hoffler Properties beats Elme Communities on 13 of the 16 factors compared between the two stocks.

About Elme Communities

Elme Communities is committed to elevating what home can be for middle-income renters by providing a higher level of quality, service, and experience. The Company is a multifamily real estate investment trust that owns and operates approximately 9,400 apartment homes in the Washington, DC metro and the Atlanta metro regions, and owns approximately 300,000 square feet of commercial space. Focused on providing quality, affordable homes to a deep, solid, and underserved base of mid-market demand, Elme Communities is building long-term value for shareholders.

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.