Monmouth R.E. Inv. (NYSE: MNR) and Government Properties Income Trust (NASDAQ:GOV) are both small-cap financials companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, dividends, institutional ownership, risk and earnings.

Insider and Institutional Ownership

63.1% of Monmouth R.E. Inv. shares are owned by institutional investors. Comparatively, 58.2% of Government Properties Income Trust shares are owned by institutional investors. 5.3% of Monmouth R.E. Inv. shares are owned by insiders. Comparatively, 2.7% of Government Properties Income Trust shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Monmouth R.E. Inv. has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500. Comparatively, Government Properties Income Trust has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500.

Profitability

This table compares Monmouth R.E. Inv. and Government Properties Income Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Monmouth R.E. Inv. 30.84% 7.65% 2.58%
Government Properties Income Trust 15.30% 4.27% 1.66%

Earnings and Valuation

This table compares Monmouth R.E. Inv. and Government Properties Income Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Monmouth R.E. Inv. $97.66 million 13.90 $40.27 million $0.32 55.41
Government Properties Income Trust $258.18 million 6.85 $57.84 million $0.55 32.44

Government Properties Income Trust has higher revenue and earnings than Monmouth R.E. Inv.. Government Properties Income Trust is trading at a lower price-to-earnings ratio than Monmouth R.E. Inv., indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Monmouth R.E. Inv. and Government Properties Income Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Monmouth R.E. Inv. 0 1 4 0 2.80
Government Properties Income Trust 2 1 2 0 2.00

Monmouth R.E. Inv. currently has a consensus target price of $17.50, indicating a potential downside of 1.30%. Government Properties Income Trust has a consensus target price of $18.75, indicating a potential upside of 5.10%. Given Government Properties Income Trust’s higher probable upside, analysts plainly believe Government Properties Income Trust is more favorable than Monmouth R.E. Inv..

Dividends

Monmouth R.E. Inv. pays an annual dividend of $0.68 per share and has a dividend yield of 3.8%. Government Properties Income Trust pays an annual dividend of $1.72 per share and has a dividend yield of 9.6%. Monmouth R.E. Inv. pays out 212.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Government Properties Income Trust pays out 312.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Government Properties Income Trust has raised its dividend for 3 consecutive years. Government Properties Income Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Monmouth R.E. Inv. beats Government Properties Income Trust on 10 of the 17 factors compared between the two stocks.

About Monmouth R.E. Inv.

Monmouth Real Estate Investment Corporation is a real estate investment trust (REIT). The Company’s primary business is the ownership of real estate. Its investment focus is to own single tenant, industrial buildings and leased to investment-grade tenants or their subsidiaries on long-term net leases. In addition, the Company owns a portfolio of REIT investment securities. Its assets are situated near airports, transportation hubs and manufacturing plants. The Company’s property portfolio consists of approximately 109 properties located across 30 states, containing a total of approximately 18.9 million rentable square feet.

About Government Properties Income Trust

Government Properties Income Trust is a real estate investment trust (REIT). The Company operates through two segments: ownership of properties that are primarily leased to government tenants and its equity method investment in Select Income REIT (SIR). The Company’s properties are located in areas, including Alabama, Arizona, California, Colorado, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey and New Mexico. As of December 31, 2016, the Company owned 73 properties (95 buildings). As of December 31, 2016, the Company’s properties were located in 31 states and the District of Columbia, and contained approximately 11.4 million rentable square feet.

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