TIER REIT (NYSE: TIER) and Highwoods Properties (NYSE:HIW) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.

Risk and Volatility

TIER REIT has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for TIER REIT and Highwoods Properties, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TIER REIT 0 0 2 0 3.00
Highwoods Properties 0 4 3 0 2.43

TIER REIT currently has a consensus price target of $20.50, suggesting a potential upside of 3.43%. Highwoods Properties has a consensus price target of $54.80, suggesting a potential upside of 8.19%. Given Highwoods Properties’ higher probable upside, analysts plainly believe Highwoods Properties is more favorable than TIER REIT.

Dividends

TIER REIT pays an annual dividend of $0.72 per share and has a dividend yield of 3.6%. Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.5%. TIER REIT pays out 39.6% of its earnings in the form of a dividend. Highwoods Properties pays out 122.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TIER REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

57.6% of TIER REIT shares are owned by institutional investors. Comparatively, 96.5% of Highwoods Properties shares are owned by institutional investors. 1.2% of TIER REIT shares are owned by company insiders. Comparatively, 1.9% of Highwoods Properties shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares TIER REIT and Highwoods Properties’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TIER REIT $242.82 million 3.90 -$29.41 million $1.82 10.89
Highwoods Properties $665.63 million 7.86 $524.29 million $1.44 35.17

Highwoods Properties has higher revenue and earnings than TIER REIT. TIER REIT is trading at a lower price-to-earnings ratio than Highwoods Properties, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares TIER REIT and Highwoods Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TIER REIT 40.68% 12.86% 5.60%
Highwoods Properties 22.02% 7.09% 3.36%

TIER REIT Company Profile

TIER REIT, Inc. is a real estate investment trust. The Company’s business consists of owning, acquiring, developing, operating, investing in, and disposing of real estate assets. The Company’s business is conducted through Tier Operating Partnership LP (Tier OP). As of December 31, 2016, the Company owned interests in 29 operating office properties, one non-operating property and one development property located in 13 markets throughout the United States. It owns properties located in metropolitan cities and suburban markets in the United States. The Company’s office properties include The Terrace Office Park, Domain 3, Domain 4, 5950 Sherry Lane, Burnett Plaza, Loop Central, One BriarLake Plaza, Three Eldridge Place, Eisenhower I, Forum Office Park, 500 E. Pratt, Woodcrest Corporate Center and 111 Woodcrest. The Company’s properties are located in Austin, Dallas, Houston, Charlotte, Nashville, Atlanta and Denver.

Highwoods Properties Company Profile

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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