NorthStar Realty Europe Corp. (NYSE: NRE) and Parkway (NYSE:PKY) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, valuation, earnings, dividends, institutional ownership, risk and analyst recommendations.

Institutional & Insider Ownership

71.2% of NorthStar Realty Europe Corp. shares are owned by institutional investors. Comparatively, 97.1% of Parkway shares are owned by institutional investors. 2.2% of NorthStar Realty Europe Corp. shares are owned by company insiders. Comparatively, 4.9% of Parkway shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for NorthStar Realty Europe Corp. and Parkway, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NorthStar Realty Europe Corp. 0 0 3 0 3.00
Parkway 0 3 1 0 2.25

NorthStar Realty Europe Corp. currently has a consensus target price of $16.83, suggesting a potential upside of 24.97%. Parkway has a consensus target price of $23.25, suggesting a potential upside of 22.11%. Given NorthStar Realty Europe Corp.’s stronger consensus rating and higher possible upside, research analysts clearly believe NorthStar Realty Europe Corp. is more favorable than Parkway.

Profitability

This table compares NorthStar Realty Europe Corp. and Parkway’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NorthStar Realty Europe Corp. -18.57% 7.73% 2.46%
Parkway -25.52% -3.82% -2.30%

Dividends

NorthStar Realty Europe Corp. pays an annual dividend of $0.60 per share and has a dividend yield of 4.5%. Parkway pays an annual dividend of $0.40 per share and has a dividend yield of 2.1%. NorthStar Realty Europe Corp. pays out -133.3% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares NorthStar Realty Europe Corp. and Parkway’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NorthStar Realty Europe Corp. $131.25 million 5.67 $37.01 million ($0.45) -29.93
Parkway $182.22 million 5.14 $54.29 million N/A N/A

Parkway has higher revenue and earnings than NorthStar Realty Europe Corp..

Volatility and Risk

NorthStar Realty Europe Corp. has a beta of 2.5, suggesting that its stock price is 150% more volatile than the S&P 500. Comparatively, Parkway has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500.

Summary

NorthStar Realty Europe Corp. beats Parkway on 10 of the 14 factors compared between the two stocks.

About NorthStar Realty Europe Corp.

NorthStar Realty Europe Corp. is a real estate investment trust (REIT). The Company is a European focused commercial real estate company with primary office properties in cities within Germany, the United Kingdom and France. Its objective is to provide its stockholders with stable and recurring cash flow supplemented by capital growth over time. The Company conducts its business through two segments: Real Estate and Corporate. Its European commercial real estate business is primarily focused on office properties. Its portfolio consists of approximately 48 properties and a total of approximately 495,588 square meters of rentable space, located in various European markets, including Frankfurt, Hamburg, Berlin, London, Paris, Amsterdam, Milan, Brussels and Madrid. Its overall portfolio is over 87% occupied. In addition, it owns over two hotels, which are leased to third-party operators. It is externally managed and advised by an affiliate of NorthStar Asset Management Group Inc. (NSAM).

About Parkway

Parkway, Inc. is a self-managed real estate investment trust (REIT). The Company owns and operates office properties located in submarkets in Houston, Texas. As of December 31, 2016, the Company’s portfolio consisted of five Class A assets comprising 19 buildings and totaling approximately 8.7 million rentable square feet in the Greenway, Galleria and Westchase submarkets of Houston. In addition, the Company operates a fee-based real estate service (the Third-Party Services Business) through a subsidiary, Eola Office Partners, LLC and its subsidiaries (collectively, Eola), which in total managed approximately 3.8 million square feet (unaudited) for primarily third-party owners, as of December 31, 2016. The Company’s properties include CityWestPlace, San Felipe Plaza, Phoenix Tower, Greenway Plaza and Post Oak Central.

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