Piedmont Office Realty Trust (NYSE: PDM) and Highwoods Properties (NYSE:HIW) are both mid-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitability, earnings, analyst recommendations and dividends.
Piedmont Office Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 4.1%. Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.4%. 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. Highwoods Properties pays out 141.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties has increased its dividend for 3 consecutive years.
Insider & Institutional Ownership
82.8% of Piedmont Office Realty Trust shares are held by institutional investors. Comparatively, 98.4% of Highwoods Properties shares are held by institutional investors. 0.8% of Piedmont Office Realty Trust shares are held by company insiders. Comparatively, 1.9% of Highwoods Properties shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Piedmont Office Realty Trust and Highwoods Properties’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Piedmont Office Realty Trust||$579.79 million||5.11||$263.29 million||$0.38||53.58|
|Highwoods Properties||$683.61 million||7.86||$366.80 million||$1.24||41.95|
Highwoods Properties has higher revenue and earnings than Piedmont Office Realty Trust. Highwoods Properties 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.
This table compares Piedmont Office Realty Trust and Highwoods Properties’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Piedmont Office Realty Trust||9.71%||2.67%||1.29%|
Risk and Volatility
Piedmont Office Realty Trust has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.
This is a summary of current ratings and price targets for Piedmont Office Realty Trust and Highwoods Properties, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Piedmont Office Realty Trust||0||1||1||0||2.50|
Piedmont Office Realty Trust presently has a consensus target price of $22.25, suggesting a potential upside of 9.28%. Highwoods Properties has a consensus target price of $54.67, suggesting a potential upside of 5.09%. Given Piedmont Office Realty Trust’s higher probable upside, analysts clearly believe Piedmont Office Realty Trust is more favorable than Highwoods Properties.
Highwoods Properties beats Piedmont Office Realty Trust on 14 of the 16 factors compared between the two stocks.
About Piedmont Office Realty Trust
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.
About Highwoods Properties
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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