Paramount Group (NYSE: PGRE) and Piedmont Office Realty Trust (NYSE:PDM) are both mid-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, risk, valuation, dividends and profitability.

Risk and Volatility

Paramount Group has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500. Comparatively, Piedmont Office Realty Trust has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Valuation & Earnings

This table compares Paramount Group and Piedmont Office Realty Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Paramount Group $708.66 million 5.55 $384.89 million $0.41 40.15
Piedmont Office Realty Trust $579.79 million 5.11 $263.29 million $0.38 53.55

Paramount Group has higher revenue and earnings than Piedmont Office Realty Trust. Paramount Group 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.

Profitability

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

Net Margins Return on Equity Return on Assets
Paramount Group 13.88% 1.99% 1.12%
Piedmont Office Realty Trust 9.71% 2.67% 1.29%

Insider and Institutional Ownership

62.3% of Paramount Group shares are held by institutional investors. Comparatively, 82.8% of Piedmont Office Realty Trust shares are held by institutional investors. 5.7% of Paramount Group shares are held by insiders. Comparatively, 0.8% of Piedmont Office Realty Trust shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

Paramount Group pays an annual dividend of $0.38 per share and has a dividend yield of 2.3%. Piedmont Office Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 4.1%. Paramount Group pays out 92.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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. Paramount Group has raised its dividend for 3 consecutive years.

Analyst Ratings

This is a summary of recent recommendations for Paramount Group and Piedmont Office Realty Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Paramount Group 2 1 1 0 1.75
Piedmont Office Realty Trust 0 1 1 0 2.50

Paramount Group currently has a consensus price target of $15.50, indicating a potential downside of 5.83%. Piedmont Office Realty Trust has a consensus price target of $22.50, indicating a potential upside of 10.57%. Given Piedmont Office Realty Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Piedmont Office Realty Trust is more favorable than Paramount Group.

Summary

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

Paramount Group Company Profile

Paramount Group, Inc. is a fully-integrated real estate investment trust (REIT) focused on owning, operating, managing, acquiring and redeveloping Class A office properties in select central business district submarkets of New York City, Washington, District of Columbia (D.C.) and San Francisco. The Company conducts its business through, and substantially all its interests in properties and investments are held by, Paramount Group Operating Partnership LP (the Operating Partnership). The Company’s segments include New York, Washington, D.C. and San Francisco. As of December 31, 2016, the Company’s portfolio consisted of 13 Class A office properties aggregating approximately 10.8 million square feet that was 93.3% leased and 90.9% occupied. The Company also has an investment management business, where it serves as the general partner and property manager of certain private equity real estate funds for institutional investors and high-net-worth individuals.

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.

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