Critical Review: Arbor Realty Trust (NYSE:ABR) & Ventas (NYSE:VTR)

Ventas (NYSE:VTR) and Arbor Realty Trust (NYSE:ABR) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, valuation, dividends, analyst recommendations, institutional ownership and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ventas	-1.38%	-0.69%	-0.27%
Arbor Realty Trust	23.99%	14.94%	2.61%

Dividends

Ventas pays an annual dividend of $1.80 per share and has a dividend yield of 3.0%. Arbor Realty Trust pays an annual dividend of $1.72 per share and has a dividend yield of 12.6%. Ventas pays out -1,058.8% of its earnings in the form of a dividend. Arbor Realty Trust pays out 127.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arbor Realty Trust has raised its dividend for 13 consecutive years. Arbor Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Ventas and Arbor Realty Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ventas	0	1	7	2	3.10
Arbor Realty Trust	2	2	2	0	2.00

Ventas currently has a consensus price target of $67.13, suggesting a potential upside of 11.41%. Arbor Realty Trust has a consensus price target of $14.00, suggesting a potential upside of 2.88%. Given Ventas’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Ventas is more favorable than Arbor Realty Trust.

Institutional and Insider Ownership

94.2% of Ventas shares are owned by institutional investors. Comparatively, 57.3% of Arbor Realty Trust shares are owned by institutional investors. 1.0% of Ventas shares are owned by company insiders. Comparatively, 3.7% of Arbor Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Ventas and Arbor Realty Trust”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ventas	$4.50 billion	5.62	-$40.97 million	($0.17)	-354.39
Arbor Realty Trust	$1.33 billion	1.93	$371.43 million	$1.35	10.08

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

Risk and Volatility

Ventas has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500. Comparatively, Arbor Realty Trust has a beta of 2.04, meaning that its share price is 104% more volatile than the S&P 500.

Summary

Arbor Realty Trust beats Ventas on 10 of the 18 factors compared between the two stocks.

About Ventas

Ventas Inc. (NYSE: VTR) is a leading S&P 500 real estate investment trust focused on delivering strong, sustainable shareholder returns by enabling exceptional environments that benefit a large and growing aging population. The Company's growth is fueled by its senior housing communities, which provide valuable services to residents and enable them to thrive in supported environments. Ventas leverages its unmatched operational expertise, data-driven insights from its Ventas Operational InsightsTM platform, extensive relationships and strong financial position to achieve its goal of delivering outsized performance across approximately 1,400 properties. The Ventas portfolio is composed of senior housing communities, outpatient medical buildings, research centers and healthcare facilities in North America and the United Kingdom. The Company benefits from a seasoned team of talented professionals who share a commitment to excellence, integrity and a common purpose of helping people live longer, healthier, happier lives.

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.