Washington Real Estate Investment Trust (NYSE: WRE) and HCP (NYSE:HCP) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.

Institutional & Insider Ownership

85.1% of Washington Real Estate Investment Trust shares are owned by institutional investors. Comparatively, 89.4% of HCP shares are owned by institutional investors. 0.8% of Washington Real Estate Investment Trust shares are owned by insiders. Comparatively, 0.1% of HCP shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Washington Real Estate Investment Trust pays an annual dividend of $1.20 per share and has a dividend yield of 3.9%. HCP pays an annual dividend of $1.48 per share and has a dividend yield of 5.7%. Washington Real Estate Investment Trust pays out 65.9% of its earnings in the form of a dividend. HCP pays out 75.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Washington Real Estate Investment Trust and HCP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Washington Real Estate Investment Trust 5.72% 1.76% 0.79%
HCP 3.39% 1.12% 0.45%

Valuation & Earnings

This table compares Washington Real Estate Investment Trust and HCP’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Washington Real Estate Investment Trust $325.08 million 7.42 $19.66 million $1.82 16.85
HCP $1.85 billion 6.60 $414.16 million $1.95 13.32

HCP has higher revenue and earnings than Washington Real Estate Investment Trust. HCP is trading at a lower price-to-earnings ratio than Washington Real Estate Investment Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Washington Real Estate Investment Trust and HCP, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Washington Real Estate Investment Trust 1 1 3 0 2.40
HCP 2 10 4 0 2.13

Washington Real Estate Investment Trust presently has a consensus target price of $29.75, indicating a potential downside of 3.00%. HCP has a consensus target price of $25.93, indicating a potential downside of 0.20%. Given HCP’s higher probable upside, analysts clearly believe HCP is more favorable than Washington Real Estate Investment Trust.

Volatility and Risk

Washington Real Estate Investment Trust has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500. Comparatively, HCP has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Summary

Washington Real Estate Investment Trust beats HCP on 9 of the 16 factors compared between the two stocks.

Washington Real Estate Investment Trust Company Profile

Washington REIT owns and operates uniquely positioned real estate assets in the Washington D.C. market. The Company's portfolio of 48 properties consists of approximately 6.1 million square feet of commercial space and 4,268 multifamily apartment units. These 48 properties consist of 19 office properties, 16 retail centers and 13 multifamily properties. Washington REIT shares are publicly traded on the New York Stock Exchange (NYSE:WRE).

HCP Company Profile

HCP, Inc. is a fully integrated real estate investment trust (REIT) that invests in real estate serving the healthcare industry in the United States. HCP owns a large-scale portfolio primarily diversified across life science, medical office and senior housing. Recognized as a global leader in sustainability, HCP has been a publicly-traded company since 1985 and was the first healthcare REIT selected to the S&P 500 index. For more information regarding HCP, visit www.hcpi.com.

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