Critical Analysis: Independence Realty Trust (NYSE:IRT) and American Homes 4 Rent (NYSE:AMH)

American Homes 4 Rent (NYSE:AMH) and Independence Realty Trust (NYSE:IRT) are both real estate companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, profitability, earnings, dividends, institutional ownership, analyst recommendations and risk.

Dividends

American Homes 4 Rent pays an annual dividend of $1.32 per share and has a dividend yield of 4.1%. Independence Realty Trust pays an annual dividend of $0.72 per share and has a dividend yield of 4.8%. American Homes 4 Rent pays out 108.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Independence Realty Trust pays out 276.9% 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 has increased its dividend for 5 consecutive years and Independence Realty Trust has increased its dividend for 3 consecutive years.

Risk & Volatility

American Homes 4 Rent has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500. Comparatively, Independence Realty Trust has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500.

Valuation & Earnings

This table compares American Homes 4 Rent and Independence Realty Trust”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Homes 4 Rent	$1.85 billion	6.35	$452.97 million	$1.22	26.71
Independence Realty Trust	$657.70 million	5.36	$56.56 million	$0.26	57.44

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

Analyst Ratings

This is a breakdown of current ratings and target prices for American Homes 4 Rent and Independence Realty Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Homes 4 Rent	0	7	10	1	2.67
Independence Realty Trust	0	4	8	1	2.77

American Homes 4 Rent currently has a consensus target price of $36.65, indicating a potential upside of 12.46%. Independence Realty Trust has a consensus target price of $19.39, indicating a potential upside of 29.82%. Given Independence Realty Trust’s stronger consensus rating and higher probable upside, analysts clearly believe Independence Realty Trust is more favorable than American Homes 4 Rent.

Profitability

This table compares American Homes 4 Rent and Independence Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Homes 4 Rent	24.17%	6.03%	3.47%
Independence Realty Trust	9.19%	1.75%	1.02%

Insider and Institutional Ownership

91.9% of American Homes 4 Rent shares are owned by institutional investors. Comparatively, 88.2% of Independence Realty Trust shares are owned by institutional investors. 5.7% of American Homes 4 Rent shares are owned by insiders. Comparatively, 0.7% of Independence Realty Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

American Homes 4 Rent beats Independence Realty Trust on 12 of the 17 factors compared between the two stocks.

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.

About Independence Realty Trust

Independence Realty Trust, Inc. (NYSE: IRT) is a real estate investment trust that owns and operates multifamily communities, across non-gateway U.S. markets including Atlanta, GA, Dallas, TX, Denver, CO, Columbus, OH, Indianapolis, IN, Raleigh-Durham, NC, Oklahoma City, OK, Nashville, TN, Houston, TX, and Tampa, FL. IRT’s investment strategy is focused on gaining scale near major employment centers within key amenity rich submarkets that offer good school districts and high-quality retail. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return on capital through distributions and capital appreciation.