Financial Survey: Saul Centers (NYSE:BFS) & Safehold (NYSE:SAFE)

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

Profitability

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

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

Volatility & Risk

Safehold has a beta of 1.67, suggesting that its share price is 67% more volatile than the S&P 500. Comparatively, Saul Centers has a beta of 1.12, suggesting that its share price is 12% more volatile than the S&P 500.

Insider and Institutional Ownership

70.4% of Safehold shares are owned by institutional investors. Comparatively, 50.0% of Saul Centers shares are owned by institutional investors. 3.3% of Safehold shares are owned by company insiders. Comparatively, 56.6% of Saul Centers shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Safehold pays an annual dividend of $0.70 per share and has a dividend yield of 4.1%. Saul Centers pays an annual dividend of $2.36 per share and has a dividend yield of 6.3%. Safehold pays out 41.2% of its earnings in the form of a dividend. 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.

Analyst Recommendations

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

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

Safehold presently has a consensus target price of $26.88, indicating a potential upside of 58.37%. Saul Centers has a consensus target price of $45.50, indicating a potential upside of 21.50%. Given Safehold’s higher probable upside, equities analysts clearly believe Safehold is more favorable than Saul Centers.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Safehold	$376.84 million	3.22	-$54.97 million	$1.70	9.98
Saul Centers	$267.61 million	3.38	$52.69 million	$1.84	20.35

Saul Centers has lower revenue, but higher earnings 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.

Summary

Saul Centers beats Safehold on 9 of the 16 factors compared between the two stocks.

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.

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.