Critical Survey: SL Green Realty Corporation (SLG) versus Highwoods Properties (HIW)
SL Green Realty Corporation (NYSE: SLG) and Highwoods Properties (NYSE:HIW) are both mid-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.
SL Green Realty Corporation pays an annual dividend of $3.10 per share and has a dividend yield of 3.1%. Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.4%. SL Green Realty Corporation pays out 319.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties pays out 141.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties has increased its dividend for 5 consecutive years. Highwoods Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional & Insider Ownership
99.5% of Highwoods Properties shares are held by institutional investors. 3.1% of SL Green Realty Corporation shares are held by insiders. Comparatively, 1.9% of Highwoods Properties shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares SL Green Realty Corporation and Highwoods Properties’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|SL Green Realty Corporation||$1.53 billion||6.42||$871.44 million||$0.97||102.27|
|Highwoods Properties||$683.61 million||7.77||$366.80 million||$1.24||41.49|
SL Green Realty Corporation has higher revenue and earnings than Highwoods Properties. Highwoods Properties is trading at a lower price-to-earnings ratio than SL Green Realty Corporation, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
SL Green Realty Corporation has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.
This table compares SL Green Realty Corporation and Highwoods Properties’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|SL Green Realty Corporation||7.20%||1.43%||0.72%|
This is a breakdown of current ratings and target prices for SL Green Realty Corporation and Highwoods Properties, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|SL Green Realty Corporation||0||8||6||0||2.43|
SL Green Realty Corporation presently has a consensus price target of $115.91, suggesting a potential upside of 16.84%. Highwoods Properties has a consensus price target of $54.67, suggesting a potential upside of 6.25%. Given SL Green Realty Corporation’s higher possible upside, equities analysts plainly believe SL Green Realty Corporation is more favorable than Highwoods Properties.
Highwoods Properties beats SL Green Realty Corporation on 10 of the 17 factors compared between the two stocks.
About SL Green Realty Corporation
SL Green Realty Corp. is a self-managed real estate investment trust (REIT), with in-house capabilities in property management, acquisitions and dispositions, financing, development and redevelopment, construction and leasing. The Company operates through two segments: real estate, and debt and preferred equity investments. It acquires, owns, repositions, manages and leases commercial office, retail and multifamily properties in the New York Metropolitan area. Its debt and preferred equity activities include purchases and originations, inclusive of advances under future funding obligations, discount and fee amortization, and paid-in-kind interest. As of December 31, 2016, the Company owned or held interests in 24 consolidated commercial office buildings encompassing approximately 16.1 million rentable square feet and seven unconsolidated commercial office buildings encompassing approximately 6.6 million rentable square feet located primarily in midtown Manhattan.
About Highwoods Properties
Highwoods Properties, Inc. is an office real estate investment trust (REIT). The Company’s primary business is the operation, acquisition and development of office properties. The Company’s segments include Office and Other. The Company owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Greensboro, Memphis, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa. The Company conducts its activities through Highwoods Realty Limited Partnership (the Operating Partnership). The Company offers a range of real estate services to its customers. The Company offers services, including asset management, construction management, design and space planning, and renovation and re-positioning. The Company provides its customers with services, such as build-to-suit construction and space modification, including tenant improvements and expansions.
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