CubeSmart (NYSE:CUBE) versus Safehold (NYSE:SAFE) Financial Review

Safehold (NYSE:SAFE) and CubeSmart (NYSE:CUBE) are both real estate companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, institutional ownership, profitability and risk.

Valuation and Earnings

This table compares Safehold and CubeSmart”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Safehold	$385.55 million	1.78	$114.47 million	$1.62	6.05
CubeSmart	$1.12 billion	8.97	$333.78 million	$1.51	29.88

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

Dividends

Safehold pays an annual dividend of $0.71 per share and has a dividend yield of 7.2%. CubeSmart pays an annual dividend of $2.12 per share and has a dividend yield of 4.7%. Safehold pays out 43.8% of its earnings in the form of a dividend. CubeSmart pays out 140.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Safehold has increased its dividend for 1 consecutive years and CubeSmart has increased its dividend for 16 consecutive years. Safehold is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Safehold and CubeSmart, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Safehold	2	9	2	0	2.00
CubeSmart	0	8	5	0	2.38

Safehold presently has a consensus price target of $14.00, suggesting a potential upside of 42.86%. CubeSmart has a consensus price target of $44.00, suggesting a potential downside of 2.48%. Given Safehold’s higher possible upside, equities research analysts plainly believe Safehold is more favorable than CubeSmart.

Institutional and Insider Ownership

70.4% of Safehold shares are held by institutional investors. Comparatively, 97.6% of CubeSmart shares are held by institutional investors. 3.8% of Safehold shares are held by insiders. Comparatively, 1.8% of CubeSmart shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

Safehold has a beta of 1.82, suggesting that its share price is 82% more volatile than the S&P 500. Comparatively, CubeSmart has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Safehold	26.19%	4.63%	1.58%
CubeSmart	30.17%	13.15%	5.24%

Summary

CubeSmart beats Safehold on 11 of the 17 factors compared between the two stocks.

About Safehold

Safehold is a real estate investment trust (REIT) focused on owning ground leases beneath commercial properties. Under this structure, Safehold owns the land while the property owner retains ownership of the buildings and is responsible for their operations. The company’s ground leases support a range of property types, including office, multifamily, and mixed-use real estate. Safehold works with property owners and developers seeking long-term arrangements for the land beneath their properties.

About CubeSmart

CubeSmart is a self-storage real estate investment trust (REIT) that owns and operates storage facilities in the United States. Its facilities provide rental storage space for individuals and businesses, with options that may include climate-controlled units and storage for vehicles, depending on the location. In addition to operating its own properties, CubeSmart provides management services for self-storage facilities owned by third parties. Its locations serve customers in markets across the country, including major metropolitan areas.