Critical Review: Paramount Group (PGRE) vs. Equity Commonwealth (EQC)

Paramount Group (NASDAQ: PGRE) and Equity Commonwealth (NYSE:EQC) are both mid-cap financials companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, earnings, risk and institutional ownership.

Institutional and Insider Ownership

94.5% of Equity Commonwealth shares are held by institutional investors. 1.0% of Equity Commonwealth shares are held 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.

Analyst Ratings

This is a summary of recent ratings for Paramount Group and Equity Commonwealth, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paramount Group	3	0	3	0	2.00
Equity Commonwealth	0	3	0	0	2.00

Paramount Group presently has a consensus price target of $16.10, suggesting a potential upside of 1.90%. Equity Commonwealth has a consensus price target of $32.00, suggesting a potential upside of 5.12%. Given Equity Commonwealth’s higher probable upside, analysts clearly believe Equity Commonwealth is more favorable than Paramount Group.

Valuation & Earnings

This table compares Paramount Group and Equity Commonwealth’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Paramount Group	$708.66 million	5.32	$384.89 million	N/A	N/A
Equity Commonwealth	$409.33 million	9.23	$194.30 million	$0.86	35.40

Paramount Group has higher revenue and earnings than Equity Commonwealth.

Profitability

This table compares Paramount Group and Equity Commonwealth’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Paramount Group	0.90%	0.04%	0.07%
Equity Commonwealth	28.50%	3.69%	2.52%

Summary

Equity Commonwealth beats Paramount Group on 7 of the 11 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.

Equity Commonwealth Company Profile

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.