TIER REIT (OTCMKTS: TIER) and Paramount Group (NYSE:PGRE) are both financials companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, earnings, profitability, institutional ownership, risk and dividends.

Dividends

Paramount Group pays an annual dividend of $0.38 per share and has a dividend yield of 2.4%. TIER REIT does not pay a dividend. Paramount Group pays out 92.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for TIER REIT and Paramount Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TIER REIT 0 0 2 0 3.00
Paramount Group 2 1 1 0 1.75

TIER REIT presently has a consensus price target of $20.50, suggesting a potential upside of 5.34%. Paramount Group has a consensus price target of $15.50, suggesting a potential downside of 3.73%. Given TIER REIT’s stronger consensus rating and higher possible upside, analysts plainly believe TIER REIT is more favorable than Paramount Group.

Institutional and Insider Ownership

62.8% of Paramount Group shares are held by institutional investors. 5.7% of Paramount Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares TIER REIT and Paramount Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
TIER REIT $220.99 million 4.21 $99.25 million N/A N/A
Paramount Group $708.66 million 5.42 $384.89 million $0.41 39.27

Paramount Group has higher revenue and earnings than TIER REIT.

Profitability

This table compares TIER REIT and Paramount Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TIER REIT -4.62% 2.28% -0.64%
Paramount Group 13.88% 1.99% 1.12%

Summary

Paramount Group beats TIER REIT on 9 of the 14 factors compared between the two stocks.

About TIER REIT

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.

About Paramount Group

Paramount Group, Inc. is a fully-integrated real estate investment trust (REIT) focused on owning, operating, managing, acquiring and redeveloping Class A office properties in select central business district submarkets of New York City, Washington, District of Columbia (D.C.) and San Francisco. The Company conducts its business through, and substantially all its interests in properties and investments are held by, Paramount Group Operating Partnership LP (the Operating Partnership). The Company’s segments include New York, Washington, D.C. and San Francisco. As of December 31, 2016, the Company’s portfolio consisted of 13 Class A office properties aggregating approximately 10.8 million square feet that was 93.3% leased and 90.9% occupied. The Company also has an investment management business, where it serves as the general partner and property manager of certain private equity real estate funds for institutional investors and high-net-worth individuals.

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