Elme Communities (NYSE:ELME – Get Free Report) and AvalonBay Communities (NYSE:AVB – Get Free Report) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.
Earnings & Valuation
This table compares Elme Communities and AvalonBay Communities’ top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Elme Communities | $209.38 million | 6.48 | -$30.87 million | ($0.23) | -67.15 |
| AvalonBay Communities | $2.59 billion | 9.98 | $1.14 billion | $8.89 | 20.51 |
AvalonBay Communities has higher revenue and earnings than Elme Communities. Elme Communities is trading at a lower price-to-earnings ratio than AvalonBay Communities, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Profitability
This table compares Elme Communities and AvalonBay Communities’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Elme Communities | -9.22% | -1.63% | -1.10% |
| AvalonBay Communities | 46.32% | 11.01% | 6.13% |
Dividends
Elme Communities pays an annual dividend of $0.72 per share and has a dividend yield of 4.7%. AvalonBay Communities pays an annual dividend of $6.60 per share and has a dividend yield of 3.6%. Elme Communities pays out -313.0% of its earnings in the form of a dividend. AvalonBay Communities pays out 74.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. AvalonBay Communities has increased its dividend for 1 consecutive years. Elme Communities is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional and Insider Ownership
88.5% of Elme Communities shares are held by institutional investors. Comparatively, 88.7% of AvalonBay Communities shares are held by institutional investors. 1.1% of Elme Communities shares are held by insiders. Comparatively, 0.4% of AvalonBay Communities shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Analyst Ratings
This is a breakdown of current ratings and target prices for Elme Communities and AvalonBay Communities, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Elme Communities | 0 | 3 | 0 | 0 | 2.00 |
| AvalonBay Communities | 1 | 9 | 5 | 0 | 2.27 |
Elme Communities currently has a consensus target price of $18.00, indicating a potential upside of 16.54%. AvalonBay Communities has a consensus target price of $198.53, indicating a potential upside of 8.91%. Given Elme Communities’ higher probable upside, equities research analysts clearly believe Elme Communities is more favorable than AvalonBay Communities.
Summary
AvalonBay Communities beats Elme Communities on 12 of the 17 factors compared between the two stocks.
About Elme Communities
Elme Communities (formerly known as Washington Real Estate Investment Trust or WashREIT) 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 8,900 apartment homes in the Washington, DC metro and the Sunbelt, 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 AvalonBay Communities
As of June 30, 2023, the Company owned or held a direct or indirect ownership interest in 294 apartment communities containing 88,659 apartment homes in 12 states and the District of Columbia, of which 18 communities were under development and one community was under redevelopment. 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.
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