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

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

Institutional & Insider Ownership

89.1% of Broadstone Net Lease shares are owned by institutional investors. Comparatively, 50.0% of Saul Centers shares are owned by institutional investors. 0.6% of Broadstone Net Lease 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 hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Broadstone Net Lease and Saul Centers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Broadstone Net Lease	33.56%	4.47%	2.71%
Saul Centers	20.84%	17.16%	2.72%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Broadstone Net Lease and Saul Centers, as reported by MarketBeat.com.

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

Broadstone Net Lease currently has a consensus target price of $18.60, suggesting a potential upside of 20.08%. Saul Centers has a consensus target price of $45.50, suggesting a potential upside of 23.30%. Given Saul Centers’ stronger consensus rating and higher possible upside, analysts clearly believe Saul Centers is more favorable than Broadstone Net Lease.

Volatility & Risk

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Broadstone Net Lease	$442.89 million	6.59	$155.48 million	$0.76	20.38
Saul Centers	$257.21 million	3.47	$52.69 million	$1.84	20.06

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.

Dividends

Broadstone Net Lease pays an annual dividend of $1.16 per share and has a dividend yield of 7.5%. Saul Centers pays an annual dividend of $2.36 per share and has a dividend yield of 6.4%. 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. 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.

Summary

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

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.

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.