Piedmont Office Realty Trust (NYSE: PDM) and City Office REIT (NYSE:CIO) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Profitability

This table compares Piedmont Office Realty Trust and City Office REIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Piedmont Office Realty Trust 9.71% 2.67% 1.29%
City Office REIT 3.70% 1.91% 0.51%

Analyst Ratings

This is a breakdown of current recommendations for Piedmont Office Realty Trust and City Office REIT, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Piedmont Office Realty Trust 0 1 0 0 2.00
City Office REIT 0 1 3 0 2.75

Piedmont Office Realty Trust currently has a consensus target price of $20.50, indicating a potential upside of 2.71%. City Office REIT has a consensus target price of $14.83, indicating a potential upside of 18.86%. Given City Office REIT’s stronger consensus rating and higher probable upside, analysts clearly believe City Office REIT is more favorable than Piedmont Office Realty Trust.

Valuation and Earnings

This table compares Piedmont Office Realty Trust and City Office REIT’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Piedmont Office Realty Trust $579.79 million 5.01 $263.29 million $0.38 52.53
City Office REIT $90.65 million 4.17 $47.13 million ($0.13) -96.00

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

Dividends

Piedmont Office Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 4.2%. City Office REIT pays an annual dividend of $0.94 per share and has a dividend yield of 7.5%. Piedmont Office Realty Trust pays out 221.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. City Office REIT pays out -723.1% of its earnings in the form of a dividend. Piedmont Office Realty Trust has raised its dividend for 3 consecutive years. City Office REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

86.4% of Piedmont Office Realty Trust shares are owned by institutional investors. Comparatively, 53.0% of City Office REIT shares are owned by institutional investors. 0.8% of Piedmont Office Realty Trust shares are owned by company insiders. Comparatively, 3.2% of City Office REIT shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Piedmont Office Realty Trust has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500. Comparatively, City Office REIT has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500.

Summary

Piedmont Office Realty Trust beats City Office REIT on 10 of the 16 factors compared between the two stocks.

Piedmont Office Realty Trust Company Profile

Piedmont Office Realty Trust, Inc. is an integrated self-managed real estate investment trust (REIT). The Company’s business consists primarily of owning, managing, operating, leasing, acquiring, developing, investing in, and disposing of office real estate assets. As of December 31, 2016, the Company owned and operated 65 in-service office properties, one redevelopment asset, two development assets and one office building through an unconsolidated joint venture. Its properties are located in areas, including New York, Chicago, Atlanta, Dallas, Boston, Minneapolis and Orlando. Its tenant base includes industries, such as business services, depository institutions, educational services, real estate, legal services and insurance carriers. The Company conducts business primarily through Piedmont Operating Partnership, L.P. (Piedmont OP). It performs the management of its buildings through its subsidiaries, including Piedmont Government Services, LLC and Piedmont Office Management, LLC.

City Office REIT Company Profile

City Office REIT, Inc. is a real estate investment trust. The Company is focused on acquiring, owning and operating office properties located primarily in metropolitan areas in the Southern and Western United States. It conducts its operations primarily through City Office REIT Operating Partnership, L.P. (the Operating Partnership). As of December 31, 2016, it owned 18 office complexes consisting of 37 office buildings with a total of approximately 4.4 million square feet of net rentable area (NRA) in the metropolitan areas of Boise, Dallas, Denver, Orlando, Phoenix, Portland and Tampa. Its properties include Park Tower, City Center, Intellicenter and Carillon Point in Tampa, Florida; Cherry Creek, Plaza 25, DTC Crossroads, Superior Pointe and Logan Tower in Denver, Colorado; Washington Group Plaza in Boise, Idaho; FRP Collection, Central Fairwinds and FRP Ingenuity Drive in Orlando, Florida; 190 Office Center and Lake Vista Pointe in Dallas, Texas, and SanTan in Phoenix, Arizona.

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