Select Income REIT (NASDAQ: SIR) and EPR Properties (NYSE:EPR) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, dividends, earnings, profitability, valuation, institutional ownership and analyst recommendations.
Select Income REIT pays an annual dividend of $2.04 per share and has a dividend yield of 8.7%. EPR Properties pays an annual dividend of $4.08 per share and has a dividend yield of 5.7%. Select Income REIT pays out 210.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. EPR Properties pays out 120.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Select Income REIT has raised its dividend for 6 consecutive years. Select Income REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Select Income REIT and EPR Properties’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Select Income REIT||$462.04 million||4.55||$323.87 million||$0.97||24.21|
|EPR Properties||$526.01 million||10.11||$461.10 million||$3.40||21.22|
EPR Properties has higher revenue and earnings than Select Income REIT. EPR Properties is trading at a lower price-to-earnings ratio than Select Income REIT, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
48.2% of Select Income REIT shares are owned by institutional investors. Comparatively, 85.1% of EPR Properties shares are owned by institutional investors. 2.0% of Select Income REIT shares are owned by insiders. Comparatively, 1.5% of EPR Properties shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
This is a breakdown of current ratings and recommmendations for Select Income REIT and EPR Properties, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Select Income REIT||0||0||1||0||3.00|
Select Income REIT currently has a consensus price target of $34.00, suggesting a potential upside of 44.80%. EPR Properties has a consensus price target of $78.80, suggesting a potential upside of 9.20%. Given Select Income REIT’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Select Income REIT is more favorable than EPR Properties.
This table compares Select Income REIT and EPR Properties’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Select Income REIT||18.65%||4.18%||1.85%|
Volatility & Risk
Select Income REIT has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500. Comparatively, EPR Properties has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500.
EPR Properties beats Select Income REIT on 11 of the 17 factors compared between the two stocks.
About Select Income REIT
Select Income REIT is a real estate investment trust. The Company is engaged in the ownership of properties that include buildings and leased industrial lands that are primarily net leased to single tenants. As of December 31, 2016, the Company owned 121 properties (362 buildings, leasable land parcels and easements) with approximately 44.8 million rentable square feet. As of December 31, 2016, the Company’s properties consisted of 110 office and industrial properties (133 buildings) with approximately 27.0 million square feet located in 34 states throughout the mainland United States (Mainland Properties), and 11 properties (229 buildings, leasable land parcels and easements) located on the island of Oahu, Hawaii, with approximately 17.8 million rentable square feet that are primarily leased to industrial and commercial tenants (Hawaii Properties). As of December 31, 2016, the Company’s properties were leased to 312 different tenants.
About EPR Properties
EPR Properties is a specialty real estate investment trust. The Company’s investment portfolio includes primarily entertainment, education and recreation properties. The Company’s segments include Entertainment, Education, Recreation and Other. The Entertainment segment consists of investments in megaplex theatres, entertainment retail centers, family entertainment centers and other retail parcels. The Education segment consists of investments in public charter schools, early education centers and K-12 private schools. The Recreation segment consists of investments in ski areas, waterparks, golf entertainment complexes and other recreation. The Other segment consists primarily of land under ground lease, property under development and land held for development. As of December 31, 2016, the Company’s owned real estate portfolio of megaplex theatres consisted of approximately 10.6 million square feet.
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