Critical Contrast: Omega Healthcare Investors (NYSE:OHI) versus AvalonBay Communities (NYSE:AVB)

Omega Healthcare Investors (NYSE:OHI) and AvalonBay Communities (NYSE:AVB) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, institutional ownership, valuation and risk.

Analyst Recommendations

This is a breakdown of current ratings for Omega Healthcare Investors and AvalonBay Communities, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Omega Healthcare Investors	1	6	6	0	2.38
AvalonBay Communities	0	8	8	0	2.50

Omega Healthcare Investors presently has a consensus target price of $32.89, indicating a potential upside of 5.94%. AvalonBay Communities has a consensus target price of $197.03, indicating a potential upside of 7.26%. Given AvalonBay Communities’ stronger consensus rating and higher probable upside, analysts plainly believe AvalonBay Communities is more favorable than Omega Healthcare Investors.

Profitability

This table compares Omega Healthcare Investors and AvalonBay Communities’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Omega Healthcare Investors	25.50%	6.41%	2.60%
AvalonBay Communities	33.56%	7.98%	4.51%

Valuation & Earnings

This table compares Omega Healthcare Investors and AvalonBay Communities’ revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Omega Healthcare Investors	$949.74 million	8.02	$242.18 million	$0.99	31.36
AvalonBay Communities	$2.77 billion	9.43	$928.83 million	$6.55	28.04

AvalonBay Communities has higher revenue and earnings than Omega Healthcare Investors. AvalonBay Communities is trading at a lower price-to-earnings ratio than Omega Healthcare Investors, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Omega Healthcare Investors has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500. Comparatively, AvalonBay Communities has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500.

Dividends

Omega Healthcare Investors pays an annual dividend of $2.68 per share and has a dividend yield of 8.6%. AvalonBay Communities pays an annual dividend of $6.80 per share and has a dividend yield of 3.7%. Omega Healthcare Investors pays out 270.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AvalonBay Communities pays out 103.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AvalonBay Communities has increased its dividend for 2 consecutive years.

Institutional and Insider Ownership

65.3% of Omega Healthcare Investors shares are owned by institutional investors. Comparatively, 92.6% of AvalonBay Communities shares are owned by institutional investors. 1.2% of Omega Healthcare Investors shares are owned by company insiders. Comparatively, 0.4% of AvalonBay Communities shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

AvalonBay Communities beats Omega Healthcare Investors on 13 of the 16 factors compared between the two stocks.

About Omega Healthcare Investors

Omega is a REIT that invests in the long-term healthcare industry, primarily in skilled nursing and assisted living facilities. Its portfolio of assets is operated by a diverse group of healthcare companies, predominantly in a triple-net lease structure. The assets span all regions within the U.S., as well as in the U.K.

About AvalonBay Communities

As of December 31, 2023, the Company owned or held a direct or indirect ownership interest in 299 apartment communities containing 90,669 apartment homes in 12 states and the District of Columbia, of which 18 communities were under development. The Company is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in leading metropolitan areas in New England, the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in the Company's expansion regions of Raleigh-Durham and Charlotte, North Carolina, Southeast Florida, Dallas and Austin, Texas, and Denver, Colorado.