Critical Review: Howard Hughes (NYSE:HHH) & Arbor Realty Trust (NYSE:ABR)

Arbor Realty Trust (NYSE:ABR) and Howard Hughes (NYSE:HHH) are both mid-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, dividends, institutional ownership, profitability and analyst recommendations.

Risk and Volatility

Arbor Realty Trust has a beta of 2.03, suggesting that its stock price is 103% more volatile than the S&P 500. Comparatively, Howard Hughes has a beta of 1.48, suggesting that its stock price is 48% more volatile than the S&P 500.

Profitability

This table compares Arbor Realty Trust and Howard Hughes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arbor Realty Trust	23.99%	14.94%	2.61%
Howard Hughes	6.57%	3.38%	1.03%

Valuation and Earnings

This table compares Arbor Realty Trust and Howard Hughes”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arbor Realty Trust	$1.33 billion	2.00	$371.43 million	$1.35	10.48
Howard Hughes	$1.20 billion	3.62	-$550.95 million	$1.51	57.11

Arbor Realty Trust has higher revenue and earnings than Howard Hughes. Arbor Realty Trust is trading at a lower price-to-earnings ratio than Howard Hughes, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Arbor Realty Trust and Howard Hughes, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arbor Realty Trust	2	2	2	0	2.00
Howard Hughes	0	0	2	0	3.00

Arbor Realty Trust currently has a consensus target price of $14.25, suggesting a potential upside of 0.74%. Howard Hughes has a consensus target price of $82.00, suggesting a potential downside of 4.92%. Given Arbor Realty Trust’s higher probable upside, equities analysts clearly believe Arbor Realty Trust is more favorable than Howard Hughes.

Institutional and Insider Ownership

57.3% of Arbor Realty Trust shares are held by institutional investors. Comparatively, 93.8% of Howard Hughes shares are held by institutional investors. 3.7% of Arbor Realty Trust shares are held by insiders. Comparatively, 33.0% of Howard Hughes shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Arbor Realty Trust beats Howard Hughes on 7 of the 13 factors compared between the two stocks.

About Arbor Realty Trust

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates through Structured Business and Agency Business segments. It primarily invests in bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. In addition, the company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Arbor Realty Trust, Inc. was incorporated in 2003 and is headquartered in Uniondale, New York.

About Howard Hughes

Howard Hughes Holdings Inc., together with its subsidiaries, operates as a real estate development company in the United States. It operates in four segments: Operating Assets; Master Planned Communities (MPCs); Seaport; and Strategic Developments. The Operating Assets segment consists of developed or acquired retail, office, and multi-family properties along with other retail investments. Its MPCs segment develops, sells, and leases residential and commercial land designated for long-term community development projects in and around Las Vegas, Nevada; Houston, Texas; and Phoenix, Arizona. The Seaport segment is involved in the landlord operations, managed businesses, and events and sponsorships services of its restaurant, retail, and entertain properties in Pier 17, New York City; Historic Area/Uplands; and Tin Building, as well as in 250 Water Street and in the Jean-Georges restaurants. The Strategic Development segment develops and redevelops residential condominiums and commercial properties. It serves homebuilders. Howard Hughes Holdings Inc. was founded in 2010 and is headquartered in The Woodlands, Texas.