Federal Realty Investment Trust (NYSE: FRT) and Select Income REIT (NASDAQ:SIR) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitabiliy, earnings, dividends, risk and valuation.

Risk & Volatility

Federal Realty Investment Trust has a beta of 0.29, meaning that its share price is 71% less volatile than the S&P 500. Comparatively, Select Income REIT has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Federal Realty Investment Trust and Select Income REIT, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federal Realty Investment Trust 1 3 7 0 2.55
Select Income REIT 0 0 2 0 3.00

Federal Realty Investment Trust presently has a consensus price target of $151.00, suggesting a potential upside of 13.75%. Select Income REIT has a consensus price target of $34.00, suggesting a potential upside of 48.47%. Given Select Income REIT’s stronger consensus rating and higher probable upside, analysts plainly believe Select Income REIT is more favorable than Federal Realty Investment Trust.

Profitability

This table compares Federal Realty Investment Trust and Select Income REIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federal Realty Investment Trust 30.40% 10.91% 4.05%
Select Income REIT 18.65% 4.18% 1.85%

Earnings & Valuation

This table compares Federal Realty Investment Trust and Select Income REIT’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Federal Realty Investment Trust $820.75 million 11.69 $525.43 million $3.45 38.48
Select Income REIT $462.04 million 4.43 $323.87 million $0.97 23.61

Federal Realty Investment Trust has higher revenue and earnings than Select Income REIT. Select Income REIT is trading at a lower price-to-earnings ratio than Federal Realty Investment Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Federal Realty Investment Trust pays an annual dividend of $3.92 per share and has a dividend yield of 3.0%. Select Income REIT pays an annual dividend of $2.04 per share and has a dividend yield of 8.9%. Federal Realty Investment Trust pays out 113.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Select Income REIT pays out 210.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federal Realty Investment Trust has increased its dividend for 49 consecutive years.

Insider & Institutional Ownership

94.8% of Federal Realty Investment Trust shares are held by institutional investors. Comparatively, 49.0% of Select Income REIT shares are held by institutional investors. 1.1% of Federal Realty Investment Trust shares are held by insiders. Comparatively, 2.0% of Select Income REIT shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Federal Realty Investment Trust beats Select Income REIT on 12 of the 17 factors compared between the two stocks.

About Federal Realty Investment Trust

Federal Realty Investment Trust is an equity real estate investment trust (REIT). The Company specializes in the ownership, management and redevelopment of retail and mixed-use properties located primarily in affluent communities in selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, as well as in California and South Florida. As of December 31, 2016, the Company owned or had an interest in community and neighborhood shopping centers and mixed-use properties, which operated as 96 retail real estate projects and included approximately 22.6 million square feet. As of December 31, 2016, its 96 retail shopping center and mixed-use properties were located in 12 states and the District of Columbia. As of December 31, 2016, there were approximately 2,900 leases with tenants providing a range of retail products and services. These tenants range from sole proprietorships to national retailers, or corporate group of tenants.

About Select Income REIT

Select Income REIT is a real estate investment trust. The Company is engaged in the ownership of properties that include buildings and leased industrial lands that are primarily net leased to single tenants. As of December 31, 2016, the Company owned 121 properties (362 buildings, leasable land parcels and easements) with approximately 44.8 million rentable square feet. As of December 31, 2016, the Company’s properties consisted of 110 office and industrial properties (133 buildings) with approximately 27.0 million square feet located in 34 states throughout the mainland United States (Mainland Properties), and 11 properties (229 buildings, leasable land parcels and easements) located on the island of Oahu, Hawaii, with approximately 17.8 million rentable square feet that are primarily leased to industrial and commercial tenants (Hawaii Properties). As of December 31, 2016, the Company’s properties were leased to 312 different tenants.

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