SL Green Realty (NYSE: SLG) and TIER REIT (NYSE:TIER) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, analyst recommendations, profitability, earnings and valuation.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for SL Green Realty and TIER REIT, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SL Green Realty 0 6 8 0 2.57
TIER REIT 0 0 2 0 3.00

SL Green Realty currently has a consensus target price of $115.50, suggesting a potential upside of 12.57%. TIER REIT has a consensus target price of $20.50, suggesting a potential upside of 3.27%. Given SL Green Realty’s higher possible upside, analysts plainly believe SL Green Realty is more favorable than TIER REIT.

Profitability

This table compares SL Green Realty and TIER REIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SL Green Realty 7.70% 1.54% 0.76%
TIER REIT 40.68% 12.86% 5.60%

Risk and Volatility

SL Green Realty has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500. Comparatively, TIER REIT has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Dividends

SL Green Realty pays an annual dividend of $3.10 per share and has a dividend yield of 3.0%. TIER REIT pays an annual dividend of $0.72 per share and has a dividend yield of 3.6%. SL Green Realty pays out 301.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TIER REIT pays out 39.6% of its earnings in the form of a dividend. TIER REIT has increased its dividend for 5 consecutive years. TIER REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

57.5% of TIER REIT shares are held by institutional investors. 3.1% of SL Green Realty shares are held by company insiders. Comparatively, 1.2% of TIER REIT shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares SL Green Realty and TIER REIT’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SL Green Realty $1.86 billion 5.41 $261.13 million $1.03 99.61
TIER REIT $242.82 million 3.91 -$29.41 million $1.82 10.91

SL Green Realty has higher revenue and earnings than TIER REIT. TIER REIT is trading at a lower price-to-earnings ratio than SL Green Realty, indicating that it is currently the more affordable of the two stocks.

Summary

TIER REIT beats SL Green Realty on 9 of the 17 factors compared between the two stocks.

SL Green Realty Company Profile

SL Green Realty Corp. is a self-managed real estate investment trust (REIT), with in-house capabilities in property management, acquisitions and dispositions, financing, development and redevelopment, construction and leasing. The Company operates through two segments: real estate, and debt and preferred equity investments. It acquires, owns, repositions, manages and leases commercial office, retail and multifamily properties in the New York Metropolitan area. Its debt and preferred equity activities include purchases and originations, inclusive of advances under future funding obligations, discount and fee amortization, and paid-in-kind interest. As of December 31, 2016, the Company owned or held interests in 24 consolidated commercial office buildings encompassing approximately 16.1 million rentable square feet and seven unconsolidated commercial office buildings encompassing approximately 6.6 million rentable square feet located primarily in midtown Manhattan.

TIER REIT Company Profile

TIER REIT, Inc. is a real estate investment trust. The Company’s business consists of owning, acquiring, developing, operating, investing in, and disposing of real estate assets. The Company’s business is conducted through Tier Operating Partnership LP (Tier OP). As of December 31, 2016, the Company owned interests in 29 operating office properties, one non-operating property and one development property located in 13 markets throughout the United States. It owns properties located in metropolitan cities and suburban markets in the United States. The Company’s office properties include The Terrace Office Park, Domain 3, Domain 4, 5950 Sherry Lane, Burnett Plaza, Loop Central, One BriarLake Plaza, Three Eldridge Place, Eisenhower I, Forum Office Park, 500 E. Pratt, Woodcrest Corporate Center and 111 Woodcrest. The Company’s properties are located in Austin, Dallas, Houston, Charlotte, Nashville, Atlanta and Denver.

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