Safehold (NYSE:SAFE) and Saul Centers (NYSE:BFS) Critical Analysis

Saul Centers (NYSE:BFS) and Safehold (NYSE:SAFE) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, dividends, analyst recommendations and profitability.

Volatility and Risk

Saul Centers has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500. Comparatively, Safehold has a beta of 1.67, suggesting that its stock price is 67% more volatile than the S&P 500.

Institutional and Insider Ownership

50.0% of Saul Centers shares are owned by institutional investors. Comparatively, 70.4% of Safehold shares are owned by institutional investors. 56.6% of Saul Centers shares are owned by insiders. Comparatively, 3.3% of Safehold shares are owned by 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.

Analyst Recommendations

This is a breakdown of current ratings for Saul Centers and Safehold, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Saul Centers	0	0	1	0	3.00
Safehold	0	4	4	0	2.50

Saul Centers currently has a consensus target price of $45.50, suggesting a potential upside of 18.06%. Safehold has a consensus target price of $27.63, suggesting a potential upside of 48.92%. Given Safehold’s higher possible upside, analysts plainly believe Safehold is more favorable than Saul Centers.

Dividends

Saul Centers pays an annual dividend of $2.36 per share and has a dividend yield of 6.1%. Safehold pays an annual dividend of $0.70 per share and has a dividend yield of 3.8%. Saul Centers pays out 128.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Safehold pays out 41.2% of its earnings in the form of a dividend.

Profitability

This table compares Saul Centers and Safehold’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Saul Centers	20.84%	17.16%	2.72%
Safehold	32.08%	4.79%	1.66%

Earnings & Valuation

This table compares Saul Centers and Safehold”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Saul Centers	$267.61 million	3.48	$52.69 million	$1.84	20.95
Safehold	$376.84 million	3.52	-$54.97 million	$1.70	10.91

Saul Centers has higher earnings, but lower revenue than Safehold. Safehold is trading at a lower price-to-earnings ratio than Saul Centers, indicating that it is currently the more affordable of the two stocks.

About Saul Centers

Saul Centers is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio comprised of 61 properties that includes (a) 57 community and neighborhood Shopping Centers and Mixed-Use properties with approximately 9.8 million square feet of leasable area and (b) four land and development properties. Over 85% of the Company’s property operating income is generated from properties in the metropolitan Washington, DC/Baltimore area.

About Safehold

Safehold Inc. (NYSE: SAFE) is revolutionizing real estate ownership by providing a new and better way for owners to unlock the value of the land beneath their buildings. Having created the modern ground lease industry in 2017, Safehold continues to help owners of high quality multifamily, office, industrial, hospitality, student housing, life science and mixed-use properties generate higher returns with less risk. The Company, which is taxed as a real estate investment trust (REIT), seeks to deliver safe, growing income and long-term capital appreciation to its shareholders.