Saul Centers (NYSE:BFS) & Broadstone Net Lease (NYSE:BNL) Critical Analysis

Saul Centers (NYSE:BFS) and Broadstone Net Lease (NYSE:BNL) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, risk, valuation and analyst recommendations.

Insider & Institutional Ownership

50.0% of Saul Centers shares are held by institutional investors. Comparatively, 89.1% of Broadstone Net Lease shares are held by institutional investors. 56.6% of Saul Centers shares are held by insiders. Comparatively, 0.6% of Broadstone Net Lease shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Saul Centers and Broadstone Net Lease’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%
Broadstone Net Lease	33.56%	4.47%	2.71%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Saul Centers and Broadstone Net Lease, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Saul Centers	0	0	1	0	3.00
Broadstone Net Lease	1	4	2	1	2.38

Saul Centers presently has a consensus target price of $45.50, indicating a potential upside of 21.93%. Broadstone Net Lease has a consensus target price of $18.60, indicating a potential upside of 19.11%. Given Saul Centers’ stronger consensus rating and higher probable upside, research analysts clearly believe Saul Centers is more favorable than Broadstone Net Lease.

Earnings & Valuation

This table compares Saul Centers and Broadstone Net Lease”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Saul Centers	$257.21 million	3.51	$52.69 million	$1.84	20.28
Broadstone Net Lease	$442.89 million	6.65	$155.48 million	$0.76	20.55

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

Risk & Volatility

Saul Centers has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500. Comparatively, Broadstone Net Lease has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Dividends

Saul Centers pays an annual dividend of $2.36 per share and has a dividend yield of 6.3%. Broadstone Net Lease pays an annual dividend of $1.16 per share and has a dividend yield of 7.4%. 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. Broadstone Net Lease pays out 152.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Broadstone Net Lease beats Saul Centers on 9 of the 16 factors compared between 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 Broadstone Net Lease

Broadstone Net Lease, Inc. (the Corporation) is a Maryland corporation formed on October 18, 2007, that elected to be taxed as a real estate investment trust (REIT) commencing with the taxable year ended December 31, 2008. Broadstone Net Lease, LLC (the Corporation’s operating company, or the OP), is the entity through which the Corporation conducts its business and owns (either directly or through subsidiaries) all of the Corporation’s properties. The Corporation is the sole managing member of the OP. The membership units not owned by the Corporation are referred to as OP Units or non-controlling interests. As the Corporation conducts substantially all of its operations through the OP, it is structured as what is referred to as an umbrella partnership real estate investment trust (UPREIT). The Corporation’s common stock is listed on the New York Stock Exchange under the symbol BNL.