Critical Review: Broadstone Net Lease (NYSE:BNL) and American Homes 4 Rent (NYSE:AMH)

Broadstone Net Lease (NYSE:BNL) and American Homes 4 Rent (NYSE:AMH) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of recent ratings for Broadstone Net Lease and American Homes 4 Rent, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Broadstone Net Lease	0	3	7	1	2.82
American Homes 4 Rent	0	7	8	0	2.53

Broadstone Net Lease currently has a consensus target price of $19.89, indicating a potential upside of 9.73%. American Homes 4 Rent has a consensus target price of $39.07, indicating a potential upside of 22.16%. Given American Homes 4 Rent’s higher probable upside, analysts plainly believe American Homes 4 Rent is more favorable than Broadstone Net Lease.

Institutional and Insider Ownership

89.1% of Broadstone Net Lease shares are owned by institutional investors. Comparatively, 91.9% of American Homes 4 Rent shares are owned by institutional investors. 0.6% of Broadstone Net Lease shares are owned by company insiders. Comparatively, 6.3% of American Homes 4 Rent shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Broadstone Net Lease pays an annual dividend of $1.16 per share and has a dividend yield of 6.4%. American Homes 4 Rent pays an annual dividend of $1.20 per share and has a dividend yield of 3.8%. Broadstone Net Lease pays out 246.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Homes 4 Rent pays out 101.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Broadstone Net Lease has increased its dividend for 4 consecutive years and American Homes 4 Rent has increased its dividend for 5 consecutive years.

Profitability

This table compares Broadstone Net Lease and American Homes 4 Rent’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Broadstone Net Lease	20.04%	2.91%	1.71%
American Homes 4 Rent	24.70%	5.90%	3.46%

Volatility and Risk

Broadstone Net Lease has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, American Homes 4 Rent has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500.

Valuation & Earnings

This table compares Broadstone Net Lease and American Homes 4 Rent”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Broadstone Net Lease	$447.97 million	7.65	$162.44 million	$0.47	38.56
American Homes 4 Rent	$1.73 billion	6.86	$412.43 million	$1.18	27.10

American Homes 4 Rent has higher revenue and earnings than Broadstone Net Lease. American Homes 4 Rent is trading at a lower price-to-earnings ratio than Broadstone Net Lease, indicating that it is currently the more affordable of the two stocks.

Summary

American Homes 4 Rent beats Broadstone Net Lease on 12 of the 18 factors compared between the two stocks.

About Broadstone Net Lease

Broadstone Net Lease, Inc. (the Corporation) is a Maryland corporation formed on October 18, 2007, that elected to be taxed as a real estate investment trust (REIT) commencing with the taxable year ended December 31, 2008. Broadstone Net Lease, LLC (the Corporation’s operating company, or the OP), is the entity through which the Corporation conducts its business and owns (either directly or through subsidiaries) all of the Corporation’s properties. The Corporation is the sole managing member of the OP. The membership units not owned by the Corporation are referred to as OP Units or non-controlling interests. As the Corporation conducts substantially all of its operations through the OP, it is structured as what is referred to as an umbrella partnership real estate investment trust (UPREIT). The Corporation’s common stock is listed on the New York Stock Exchange under the symbol BNL.

About American Homes 4 Rent

American Homes 4 Rent operates as a real estate investment trust. It engages in the acquisition, renovation, leasing, and operating of single-family homes as rental properties. The company was founded by Bradley Wayne Hughes, Sr. on October 19, 2012 and is headquartered in Las Vegas, NV.