Equity Commonwealth (NYSE: EQC) and Piedmont Office Realty Trust (NYSE:PDM) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, dividends, risk, profitability, institutional ownership and earnings.

Institutional & Insider Ownership

94.0% of Equity Commonwealth shares are held by institutional investors. Comparatively, 82.8% of Piedmont Office Realty Trust shares are held by institutional investors. 1.0% of Equity Commonwealth shares are held by company insiders. Comparatively, 0.8% of Piedmont Office Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Equity Commonwealth and Piedmont Office Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Equity Commonwealth 28.50% 3.69% 2.52%
Piedmont Office Realty Trust 9.71% 2.67% 1.29%

Dividends

Piedmont Office Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 4.2%. Equity Commonwealth does not pay a dividend. 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. Equity Commonwealth has raised its dividend for 3 consecutive years.

Earnings & Valuation

This table compares Equity Commonwealth and Piedmont Office Realty Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Equity Commonwealth $409.33 million 9.17 $194.30 million $0.86 35.16
Piedmont Office Realty Trust $579.79 million 5.06 $263.29 million $0.38 53.11

Piedmont Office Realty Trust has higher revenue and earnings than Equity Commonwealth. Equity Commonwealth 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.

Risk & Volatility

Equity Commonwealth has a beta of 0.13, meaning that its stock price is 87% less volatile than the S&P 500. Comparatively, Piedmont Office Realty Trust has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Equity Commonwealth and Piedmont Office Realty Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Equity Commonwealth 0 2 0 0 2.00
Piedmont Office Realty Trust 0 1 1 0 2.50

Equity Commonwealth currently has a consensus price target of $32.50, suggesting a potential upside of 7.47%. Piedmont Office Realty Trust has a consensus price target of $22.50, suggesting a potential upside of 11.50%. Given Piedmont Office Realty Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Piedmont Office Realty Trust is more favorable than Equity Commonwealth.

Summary

Equity Commonwealth beats Piedmont Office Realty Trust on 10 of the 17 factors compared between the two stocks.

About Equity Commonwealth

Equity Commonwealth is an internally managed and self-advised real estate investment trust. The Company is engaged in the ownership and operation primarily of office buildings across the United States. The Company conducts its activities primarily through EQC Operating Trust (the Operating Trust). As of August 14, 2017, the Company’s portfolio included 20 properties and 11 million square feet. As of December 31, 2016, its properties included Parkshore Plaza; 1225 Seventeenth Street; 1601 Dry Creek Drive; 97 Newberry Road; 33 Stiles Lane; 802 Delaware Avenue; 6600 North Military Trail; East Eisenhower Parkway; 2250 Pilot Knob Road; 411 Farwell Avenue; Cherrington Corporate Center; 1500 Market Street; Foster Plaza; 4515 Seton Center Parkway; Bridgepoint Square, and Research Park. As of December 31, 2016, the Company’s land parcels included 625 Crane Street and Cabot Business Park Land.

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.

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