Washington Real Estate Investment Trust (NYSE: WRE) and VEREIT (NYSE:VER) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, institutional ownership, analyst recommendations, risk and profitability.
This table compares Washington Real Estate Investment Trust and VEREIT’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Washington Real Estate Investment Trust||7.10%||2.10%||0.98%|
Washington Real Estate Investment Trust pays an annual dividend of $1.20 per share and has a dividend yield of 3.7%. VEREIT pays an annual dividend of $0.55 per share and has a dividend yield of 6.7%. Washington Real Estate Investment Trust pays out 400.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. VEREIT pays out -549.9% of its earnings in the form of a dividend. VEREIT is clearly the better dividend stock, given its higher yield and lower payout ratio.
Volatility & Risk
Washington Real Estate Investment Trust has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500. Comparatively, VEREIT has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500.
Earnings and Valuation
This table compares Washington Real Estate Investment Trust and VEREIT’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Washington Real Estate Investment Trust||$313.26 million||8.23||$119.33 million||$0.30||109.50|
|VEREIT||$1.45 billion||5.50||-$195.86 million||($0.10)||-82.09|
Washington Real Estate Investment Trust has higher revenue, but lower earnings than VEREIT. VEREIT 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.
Insider & Institutional Ownership
83.6% of Washington Real Estate Investment Trust shares are owned by institutional investors. Comparatively, 85.0% of VEREIT shares are owned by institutional investors. 0.6% of Washington Real Estate Investment Trust shares are owned by insiders. Comparatively, 0.1% of VEREIT shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This is a summary of current ratings and target prices for Washington Real Estate Investment Trust and VEREIT, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Washington Real Estate Investment Trust||0||3||3||0||2.50|
Washington Real Estate Investment Trust currently has a consensus target price of $33.92, suggesting a potential upside of 3.25%. VEREIT has a consensus target price of $10.00, suggesting a potential upside of 21.80%. Given VEREIT’s higher possible upside, analysts clearly believe VEREIT is more favorable than Washington Real Estate Investment Trust.
Washington Real Estate Investment Trust beats VEREIT on 9 of the 15 factors compared between the two stocks.
About Washington Real Estate Investment Trust
Washington Real Estate Investment Trust is a self-administered equity real estate investment trust. The Company’s business consists of the ownership and operation of real property in the greater Washington metro region. The Company owns a diversified portfolio of office buildings, multifamily buildings and retail centers. The Company’s segments include office, multifamily and retail. The Company’s office properties provide office space for various types of businesses and professions. The Company’s multifamily properties provide rental housing for individuals and families throughout the Washington metro region. Its retail properties are typically grocery store anchored neighborhood centers that include other small shop tenants or regional power centers with various junior box tenants. As of April 4, 2017, it owned a diversified portfolio of 50 properties, totaling approximately 6.0 million square feet of commercial space and 4,480 residential units, and land held for development.
VEREIT, Inc. is a full-service real estate operating company. The Company operates through two business segments: real estate investment (REI) segment and investment management segment, Cole Capital. As of December 31, 2016, through its REI segment, the Company owned and managed a portfolio of 4,142 retail, restaurant, office and industrial real estate properties with an aggregate of 93.3 million square feet, which are located in 49 states, Puerto Rico and Canada. Through its Cole Capital segment, the Company is responsible for raising capital for and managing the affairs of certain non-listed real estate investment trusts (the Cole REITs) on a day-to-day basis, identifying and making acquisitions and investments on the Cole REITs’ behalf. The Cole Capital segment sponsors and manages direct investment real estate programs, which primarily include over four publicly registered, non-traded REITs.
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