Financial Analysis: Sila Realty Trust (NYSE:SILA) and Service Properties Trust (NASDAQ:SVC)

Service Properties Trust (NASDAQ:SVC) and Sila Realty Trust (NYSE:SILA) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.

Risk and Volatility

Service Properties Trust has a beta of 1.46, meaning that its share price is 46% more volatile than the S&P 500. Comparatively, Sila Realty Trust has a beta of -0.02, meaning that its share price is 102% less volatile than the S&P 500.

Profitability

This table compares Service Properties Trust and Sila Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Service Properties Trust	-14.83%	-37.94%	-3.97%
Sila Realty Trust	19.86%	2.80%	1.89%

Insider & Institutional Ownership

77.6% of Service Properties Trust shares are owned by institutional investors. 1.4% of Service Properties Trust shares are owned by company insiders. Comparatively, 0.8% of Sila Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Service Properties Trust pays an annual dividend of $0.04 per share and has a dividend yield of 1.8%. Sila Realty Trust pays an annual dividend of $1.60 per share and has a dividend yield of 6.2%. Service Properties Trust pays out -2.4% of its earnings in the form of a dividend. Sila Realty Trust pays out 231.9% 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 ratings and target prices for Service Properties Trust and Sila Realty Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Service Properties Trust	1	3	0	0	1.75
Sila Realty Trust	0	3	1	0	2.25

Service Properties Trust currently has a consensus price target of $2.50, suggesting a potential upside of 13.12%. Sila Realty Trust has a consensus price target of $26.67, suggesting a potential upside of 3.98%. Given Service Properties Trust’s higher probable upside, research analysts plainly believe Service Properties Trust is more favorable than Sila Realty Trust.

Earnings & Valuation

This table compares Service Properties Trust and Sila Realty Trust”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Service Properties Trust	$1.90 billion	0.20	-$275.53 million	($1.67)	-1.32
Sila Realty Trust	$186.86 million	7.57	$42.66 million	$0.69	37.17

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

Summary

Sila Realty Trust beats Service Properties Trust on 10 of the 16 factors compared between the two stocks.

About Service Properties Trust

Service Properties Trust (Nasdaq: SVC) is a real estate investment trust with over $11 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of December 31, 2023, SVC owned 221 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of December 31, 2023, SVC also owned 752 service-focused retail net lease properties totaling approximately 13.3 million square feet throughout the United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of December 31, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA.

About Sila Realty Trust

Sila Realty Trust, Inc., headquartered in Tampa, Florida, is a net lease real estate investment trust with a strategic focus on investing in the large, growing, and resilient healthcare sector. The Company invests in high quality healthcare facilities along the continuum of care, which, we believe, generate predictable, durable, and growing income streams. Our portfolio comprises high quality tenants in geographically diverse facilities, which are positioned to capitalize on the dynamic delivery of healthcare to patients. As of June 30, 2024, the Company owned 137 real estate properties and two undeveloped land parcels located in 64 markets across the U.S.