SUI

We rate SUN COMMUNITIES INC (SUI) as a Hold with a composite score of 50.4/100 at a current price of $130.98. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (75th percentile) and quality (54th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (32th percentile) and momentum (41th percentile) tempers our overall conviction. We assign a No Moat rating (26/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

SUN COMMUNITIES INC holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 50.4/100 places it at rank #1943 in our full 7,333-stock universe. With a $16.1B market capitalization, SUN COMMUNITIES INC operates at meaningful scale within the Finance, Insurance, And Real Estate sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue contraction of -19% combined with momentum at the 41th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 56% (-20.5pp vs sector) narrow to operating margins of -7% (-23.7pp vs sector) and net margins of 59.6%, yielding a gross-to-net conversion rate of 106%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $130.98, SUN COMMUNITIES INC is trading near fair value based on current fundamentals. Our value factor score of 49/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 10.1x (roughly in line with the sector median of 11.9x), EV/EBITDA of 33.7x (at a premium), P/B of 2.3x, P/S of 5.9x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to SUN COMMUNITIES INC. The company exhibits strong financial stability with a beta of 0.44, and a stability factor in the 75th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.44 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 75th percentile and quality factor at the 54th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 56% provide a buffer against cost pressures; above-average stability (75th percentile) suggests predictable business dynamics; a 6.17% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate SUN COMMUNITIES INC's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 22.6%, a 6.17% dividend yield, best-in-class net margins of 59.6%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — SUN COMMUNITIES INC meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 6.17% dividend yield, and the combination of 12.5% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, SUN COMMUNITIES INC receives a Hold rating with a composite score of 50.4/100 (rank #1943 of 7,333). Our quantitative framework assigns a No Moat (26/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 50/100.

Our analysis supports a neutral stance on SUN COMMUNITIES INC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.