NorthStar Realty Europe Corp. (NYSE: NRE) and Equity Commonwealth (NYSE:EQC) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, dividends, institutional ownership, profitability, valuation and analyst recommendations.

Profitability

This table compares NorthStar Realty Europe Corp. and Equity Commonwealth’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NorthStar Realty Europe Corp. -18.57% 7.73% 2.46%
Equity Commonwealth 28.50% 3.69% 2.52%

Insider and Institutional Ownership

70.0% of NorthStar Realty Europe Corp. shares are owned by institutional investors. Comparatively, 94.5% of Equity Commonwealth shares are owned by institutional investors. 2.2% of NorthStar Realty Europe Corp. shares are owned by insiders. Comparatively, 1.0% of Equity Commonwealth shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares NorthStar Realty Europe Corp. and Equity Commonwealth’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NorthStar Realty Europe Corp. $131.25 million 5.26 $37.01 million ($0.45) -27.78
Equity Commonwealth $409.33 million 9.24 $194.30 million $0.86 35.45

Equity Commonwealth has higher revenue and earnings than NorthStar Realty Europe Corp.. NorthStar Realty Europe Corp. is trading at a lower price-to-earnings ratio than Equity Commonwealth, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for NorthStar Realty Europe Corp. and Equity Commonwealth, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NorthStar Realty Europe Corp. 0 0 0 0 N/A
Equity Commonwealth 0 2 0 0 2.00

Equity Commonwealth has a consensus price target of $32.50, indicating a potential upside of 6.59%. Given Equity Commonwealth’s higher probable upside, analysts plainly believe Equity Commonwealth is more favorable than NorthStar Realty Europe Corp..

Dividends

NorthStar Realty Europe Corp. pays an annual dividend of $0.60 per share and has a dividend yield of 4.8%. Equity Commonwealth does not pay a dividend. NorthStar Realty Europe Corp. pays out -133.3% of its earnings in the form of a dividend.

Volatility and Risk

NorthStar Realty Europe Corp. has a beta of 2.5, meaning that its share price is 150% more volatile than the S&P 500. Comparatively, Equity Commonwealth has a beta of 0.13, meaning that its share price is 87% less volatile than the S&P 500.

Summary

Equity Commonwealth beats NorthStar Realty Europe Corp. on 8 of the 13 factors compared between the two stocks.

About NorthStar Realty Europe Corp.

NorthStar Realty Europe Corp. is a real estate investment trust (REIT). The Company is a European focused commercial real estate company with primary office properties in cities within Germany, the United Kingdom and France. Its objective is to provide its stockholders with stable and recurring cash flow supplemented by capital growth over time. The Company conducts its business through two segments: Real Estate and Corporate. Its European commercial real estate business is primarily focused on office properties. Its portfolio consists of approximately 48 properties and a total of approximately 495,588 square meters of rentable space, located in various European markets, including Frankfurt, Hamburg, Berlin, London, Paris, Amsterdam, Milan, Brussels and Madrid. Its overall portfolio is over 87% occupied. In addition, it owns over two hotels, which are leased to third-party operators. It is externally managed and advised by an affiliate of NorthStar Asset Management Group Inc. (NSAM).

About Equity Commonwealth

Equity Commonwealth is an internally managed and self-advised real estate investment trust. The Company is engaged in the ownership and operation primarily of office buildings across the United States. The Company conducts its activities primarily through EQC Operating Trust (the Operating Trust). As of August 14, 2017, the Company’s portfolio included 20 properties and 11 million square feet. As of December 31, 2016, its properties included Parkshore Plaza; 1225 Seventeenth Street; 1601 Dry Creek Drive; 97 Newberry Road; 33 Stiles Lane; 802 Delaware Avenue; 6600 North Military Trail; East Eisenhower Parkway; 2250 Pilot Knob Road; 411 Farwell Avenue; Cherrington Corporate Center; 1500 Market Street; Foster Plaza; 4515 Seton Center Parkway; Bridgepoint Square, and Research Park. As of December 31, 2016, the Company’s land parcels included 625 Crane Street and Cabot Business Park Land.

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