TIER REIT (TIER) and Its Peers Critical Review

TIER REIT (NYSE: TIER) is one of 17 public companies in the “Office REITs” industry, but how does it contrast to its competitors? We will compare TIER REIT to similar businesses based on the strength of its analyst recommendations, risk, institutional ownership, profitability, valuation, dividends and earnings.

Dividends

TIER REIT pays an annual dividend of $0.72 per share and has a dividend yield of 3.7%. TIER REIT pays out 39.1% of its earnings in the form of a dividend. As a group, “Office REITs” companies pay a dividend yield of 3.4% and pay out 169.3% of their earnings in the form of a dividend. TIER REIT has raised its dividend for 2 consecutive years. TIER REIT is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares TIER REIT and its competitors top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
TIER REIT $242.82 million -$29.41 million 10.63
TIER REIT Competitors $741.50 million $133.14 million 58.81

TIER REIT’s competitors have higher revenue and earnings than TIER REIT. TIER REIT is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Insider and Institutional Ownership

57.5% of TIER REIT shares are held by institutional investors. Comparatively, 83.6% of shares of all “Office REITs” companies are held by institutional investors. 1.2% of TIER REIT shares are held by insiders. Comparatively, 2.6% of shares of all “Office REITs” companies are held by 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.

Profitability

This table compares TIER REIT and its competitors’ 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%
TIER REIT Competitors 6.40% 2.67% 1.01%

Analyst Recommendations

This is a summary of recent recommendations for TIER REIT and its competitors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TIER REIT 0 0 3 0 3.00
TIER REIT Competitors 126 536 549 3 2.35

TIER REIT currently has a consensus target price of $21.00, suggesting a potential upside of 7.36%. As a group, “Office REITs” companies have a potential upside of 14.06%. Given TIER REIT’s competitors higher probable upside, analysts clearly believe TIER REIT has less favorable growth aspects than its competitors.

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.

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