Piedmont Office Realty Trust (NYSE: PDM) and Paramount Group (NYSE:PGRE) are both mid-cap office reits companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, earnings, dividends, profitability, analyst recommendations, valuation and risk.

Analyst Ratings

This is a summary of current recommendations for Piedmont Office Realty Trust and Paramount Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Piedmont Office Realty Trust 0 1 1 0 2.50
Paramount Group 3 0 3 0 2.00

Piedmont Office Realty Trust presently has a consensus target price of $22.00, suggesting a potential upside of 9.51%. Paramount Group has a consensus target price of $16.10, suggesting a potential downside of 0.62%. Given Piedmont Office Realty Trust’s stronger consensus rating and higher possible upside, research analysts plainly believe Piedmont Office Realty Trust is more favorable than Paramount Group.

Earnings and Valuation

This table compares Piedmont Office Realty Trust and Paramount Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Piedmont Office Realty Trust $555.72 million 5.22 $99.73 million $1.34 14.99
Paramount Group $683.34 million 5.69 -$9.93 million $0.37 43.78

Piedmont Office Realty Trust has higher revenue, but lower earnings than Paramount Group. Piedmont Office Realty Trust is trading at a lower price-to-earnings ratio than Paramount Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Piedmont Office Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 4.2%. Paramount Group pays an annual dividend of $0.38 per share and has a dividend yield of 2.3%. Piedmont Office Realty Trust pays out 62.7% of its earnings in the form of a dividend. Paramount Group pays out 102.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Piedmont Office Realty Trust has increased its dividend for 3 consecutive years. Piedmont Office Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

84.1% of Piedmont Office Realty Trust shares are held by institutional investors. Comparatively, 62.6% of Paramount Group shares are held by institutional investors. 0.8% of Piedmont Office Realty Trust shares are held by company insiders. Comparatively, 5.9% of Paramount Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Piedmont Office Realty Trust 33.72% 4.06% 2.00%
Paramount Group 12.29% 1.76% 0.99%

Summary

Piedmont Office Realty Trust beats Paramount Group on 11 of the 16 factors compared between the two stocks.

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.

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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