Critical Analysis: Equity Commonwealth (NYSE:EQC) & Orion Office REIT (NYSE:ONL)

Equity Commonwealth (NYSE:EQC) and Orion Office REIT (NYSE:ONL) are both small-cap real estate companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, dividends, valuation, profitability, risk, earnings and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Equity Commonwealth and Orion Office REIT, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Equity Commonwealth	0	0	0	0	0.00
Orion Office REIT	1	0	1	0	2.00

Orion Office REIT has a consensus target price of $3.50, suggesting a potential upside of 22.16%. Given Orion Office REIT’s stronger consensus rating and higher possible upside, analysts clearly believe Orion Office REIT is more favorable than Equity Commonwealth.

Valuation and Earnings

This table compares Equity Commonwealth and Orion Office REIT”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Equity Commonwealth	$58.43 million	2.90	$91.16 million	$0.39	4.05
Orion Office REIT	$147.65 million	1.10	-$139.31 million	($1.69)	-1.70

Equity Commonwealth has higher earnings, but lower revenue than Orion Office REIT. Orion Office REIT is trading at a lower price-to-earnings ratio than Equity Commonwealth, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Equity Commonwealth and Orion Office REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Equity Commonwealth	82.00%	2.09%	1.96%
Orion Office REIT	-65.66%	-14.85%	-7.95%

Insider & Institutional Ownership

96.0% of Equity Commonwealth shares are held by institutional investors. Comparatively, 79.9% of Orion Office REIT shares are held by institutional investors. 2.1% of Equity Commonwealth shares are held by insiders. Comparatively, 1.6% of Orion Office REIT shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

Equity Commonwealth has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500. Comparatively, Orion Office REIT has a beta of 1.57, indicating that its share price is 57% more volatile than the S&P 500.

Summary

Equity Commonwealth beats Orion Office REIT on 9 of the 14 factors compared between the two stocks.

About Equity Commonwealth

Equity Commonwealth (NYSE: EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. EQC's portfolio is comprised of four properties totaling 1.5 million square feet.

About Orion Office REIT

Orion Office REIT specializes in the ownership, acquisition and management of a diversified portfolio of mission-critical and corporate headquarters office buildings in high-quality suburban markets across the U.S. The portfolio is leased primarily on a single-tenant net lease basis to creditworthy tenants. The company's team of experienced industry leaders employs a proven, cycle-tested investment evaluation framework which serves as the lens through which capital allocation decisions are made for the current portfolio and future acquisitions.