DuPont Fabros Technology (NYSE: DFT) and Select Income REIT (NASDAQ:SIR) are both mid-cap commercial reits – nec companies, but which is the better investment? We will compare the two companies based on the strength of their risk, dividends, earnings, profitability, valuation, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares DuPont Fabros Technology and Select Income REIT’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
DuPont Fabros Technology N/A N/A N/A $1.65 40.19
Select Income REIT $462.01 million 4.92 $116.32 million $1.00 25.39

Select Income REIT has higher revenue and earnings than DuPont Fabros Technology. Select Income REIT is trading at a lower price-to-earnings ratio than DuPont Fabros Technology, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and target prices for DuPont Fabros Technology and Select Income REIT, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DuPont Fabros Technology 0 9 4 0 2.31
Select Income REIT 0 1 2 0 2.67

DuPont Fabros Technology currently has a consensus price target of $60.15, suggesting a potential downside of 9.29%. Select Income REIT has a consensus price target of $19.75, suggesting a potential downside of 22.21%. Given DuPont Fabros Technology’s higher probable upside, equities analysts plainly believe DuPont Fabros Technology is more favorable than Select Income REIT.

Institutional & Insider Ownership

48.1% of Select Income REIT shares are owned by institutional investors. 5.6% of DuPont Fabros Technology shares are owned by company insiders. Comparatively, 2.0% of Select Income REIT 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.

Profitability

This table compares DuPont Fabros Technology and Select Income REIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DuPont Fabros Technology 26.98% 17.13% 4.69%
Select Income REIT 19.15% 4.36% 1.91%

Dividends

DuPont Fabros Technology pays an annual dividend of $2.00 per share and has a dividend yield of 3.0%. Select Income REIT pays an annual dividend of $2.04 per share and has a dividend yield of 8.0%. DuPont Fabros Technology pays out 121.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Select Income REIT pays out 204.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DuPont Fabros Technology has raised its dividend for 5 consecutive years.

Volatility and Risk

DuPont Fabros Technology has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, Select Income REIT has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500.

Summary

DuPont Fabros Technology beats Select Income REIT on 9 of the 14 factors compared between the two stocks.

About DuPont Fabros Technology

DuPont Fabros Technology, Inc. (DFT) is a real estate investment trust (REIT). The Company owns, acquires, develops and operates wholesale data centers. The Company’s customers include national and international enterprises across various industries, such as technology, Internet, content providers, cloud providers, media, communications, healthcare and financial services. Its data centers are located in four population centers: Northern Virginia; suburban Chicago, Illinois; Piscataway, New Jersey, and Santa Clara, California. As of December 31, 2016, the Company owned various properties, including 11 operating data centers facilities; five phases of existing data center facilities under development; one shell of a data center under development; two data center facilities with a phase or phases available for development, and parcels of land held for development of four data centers. As of December 31, 2016, the Company’s 11 data centers had a total of 3.3 million gross square feet.

About Select Income REIT

Select Income REIT is a real estate investment trust. The Company is engaged in the ownership of properties that include buildings and leased industrial lands that are primarily net leased to single tenants. As of December 31, 2016, the Company owned 121 properties (362 buildings, leasable land parcels and easements) with approximately 44.8 million rentable square feet. As of December 31, 2016, the Company’s properties consisted of 110 office and industrial properties (133 buildings) with approximately 27.0 million square feet located in 34 states throughout the mainland United States (Mainland Properties), and 11 properties (229 buildings, leasable land parcels and easements) located on the island of Oahu, Hawaii, with approximately 17.8 million rentable square feet that are primarily leased to industrial and commercial tenants (Hawaii Properties). As of December 31, 2016, the Company’s properties were leased to 312 different tenants.

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