Financial Contrast: Digital Realty Trust (DLR) vs. First Potomac Realty Trust (FPO)

Digital Realty Trust (NYSE: DLR) and First Potomac Realty Trust (NYSE:FPO) are both financials companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, profitability, valuation and risk.

Valuation and Earnings

This table compares Digital Realty Trust and First Potomac Realty Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Digital Realty Trust $2.14 billion 11.26 $426.18 million $1.23 95.46
First Potomac Realty Trust N/A N/A N/A $0.69 16.14

Digital Realty Trust has higher revenue and earnings than First Potomac Realty Trust. First Potomac Realty Trust is trading at a lower price-to-earnings ratio than Digital Realty Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Digital Realty Trust pays an annual dividend of $3.72 per share and has a dividend yield of 3.2%. First Potomac Realty Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. Digital Realty Trust pays out 302.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. First Potomac Realty Trust pays out 58.0% of its earnings in the form of a dividend. First Potomac Realty Trust has raised its dividend for 12 consecutive years. First Potomac Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Digital Realty Trust has a beta of -0.09, meaning that its stock price is 109% less volatile than the S&P 500. Comparatively, First Potomac Realty Trust has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500.

Institutional & Insider Ownership

93.1% of First Potomac Realty Trust shares are held by institutional investors. 0.4% of Digital Realty Trust shares are held by insiders. Comparatively, 2.1% of First Potomac Realty Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Digital Realty Trust and First Potomac Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Digital Realty Trust 11.71% 5.15% 1.97%
First Potomac Realty Trust -7.99% -2.35% -0.94%

Analyst Ratings

This is a summary of recent ratings and price targets for Digital Realty Trust and First Potomac Realty Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digital Realty Trust 0 9 6 0 2.40
First Potomac Realty Trust 2 2 1 0 1.80

Digital Realty Trust currently has a consensus target price of $125.08, suggesting a potential upside of 6.53%. First Potomac Realty Trust has a consensus target price of $11.03, suggesting a potential downside of 0.99%. Given Digital Realty Trust’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Digital Realty Trust is more favorable than First Potomac Realty Trust.

Summary

Digital Realty Trust beats First Potomac Realty Trust on 8 of the 14 factors compared between the two stocks.

Digital Realty Trust Company Profile

Digital Realty Trust, Inc. is a real estate investment trust (REIT). The Company is engaged in the business of owning, acquiring, developing and operating data centers. The Company is focused on providing data center and colocation solutions for domestic and international tenants across a range of industry verticals ranging from financial services, cloud and information technology services, to manufacturing, energy, healthcare and consumer products. As of December 31, 2016, its portfolio consisted of 145 operating properties, including 14 properties held as investments in unconsolidated joint ventures, of which 104 are located throughout the United States, 32 are located in Europe, four are located in Asia, three are located in Australia and two are located in Canada. It is a general partner of Digital Realty Trust, L.P. As of December 31, 2016, it owned an approximate 98.5% common general partnership interest in Digital Realty Trust, L.P.

First Potomac Realty Trust Company Profile

First Potomac Realty Trust (First Potomac) is engaged in ownership, management, redevelopment and development of office and business park properties in the greater Washington, D.C. region. The Company’s segments include Washington, D.C., Maryland, Northern Virginia and Southern Virginia. The Company conducts its business through First Potomac Realty Investment Limited Partnership, its operating partnership. The Company’s portfolio consist a mix of single-tenant and multi-tenant office properties, and business parks. The office properties are single-story and multi-story buildings that are primarily for office uses, and business parks consists of buildings with office features combined with some industrial property space. As of December 31, 2016, the Company owned properties totaling 6.7 million square feet and had a non-controlling ownership interest in properties totaling an additional 0.9 million square feet through five unconsolidated joint ventures.

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