Financial Analysis: Independence Realty Trust (NYSE:IRT) versus American Homes 4 Rent (NYSE:AMH)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Independence Realty Trust	9.19%	1.75%	1.02%
American Homes 4 Rent	24.17%	6.07%	3.48%

Volatility and Risk

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

Dividends

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 an annual dividend of $1.32 per share and has a dividend yield of 4.1%. 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 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 has raised its dividend for 3 consecutive years and American Homes 4 Rent has raised its dividend for 5 consecutive years.

Valuation & Earnings

This table compares Independence Realty Trust 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
Independence Realty Trust	$671.80 million	5.25	$56.56 million	$0.26	57.52
American Homes 4 Rent	$1.90 billion	6.17	$452.97 million	$1.22	26.59

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.

Insider and Institutional Ownership

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Independence Realty Trust and American Homes 4 Rent, as reported by MarketBeat.com.

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

Independence Realty Trust presently has a consensus target price of $19.50, suggesting a potential upside of 30.39%. American Homes 4 Rent has a consensus target price of $36.65, suggesting a potential upside of 12.95%. Given Independence Realty Trust’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Independence Realty Trust is more favorable than American Homes 4 Rent.

Summary

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

About Independence Realty Trust

Independence Realty Trust, Inc. is a real estate investment trust (REIT) that owns and operates multifamily apartment communities in U.S. markets. Its business centers on providing rental housing and managing residential properties. The company focuses on apartment communities in non-gateway markets, with a portfolio concentrated in regions including the Southeast, Midwest and Mid-Atlantic. Its properties offer apartment homes and resident amenities. Founded in 2009, Independence Realty Trust became publicly traded on the New York Stock Exchange in 2013.

About American Homes 4 Rent

American Homes 4 Rent is a real estate investment trust that owns, operates and leases single-family homes in the United States. The company rents homes to individuals and families, offering an alternative to homeownership in its markets. In addition to acquiring existing homes, American Homes 4 Rent develops single-family properties for rental through its build-to-rent program. Its portfolio and operations span multiple regions of the country, including the Southeast, Midwest, Southwest and West.