Critical Review: Empire State Realty Trust (NYSE:ESRT) versus CubeSmart (NYSE:CUBE)

Empire State Realty Trust (NYSE:ESRT) and CubeSmart (NYSE:CUBE) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, valuation, earnings, analyst recommendations, risk and institutional ownership.

Institutional & Insider Ownership

67.1% of Empire State Realty Trust shares are held by institutional investors. Comparatively, 97.6% of CubeSmart shares are held by institutional investors. 14.6% of Empire State Realty Trust shares are held by insiders. Comparatively, 1.7% of CubeSmart shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Empire State Realty Trust has a beta of 1.76, meaning that its stock price is 76% more volatile than the S&P 500. Comparatively, CubeSmart has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500.

Dividends

Empire State Realty Trust pays an annual dividend of $0.14 per share and has a dividend yield of 1.9%. CubeSmart pays an annual dividend of $2.08 per share and has a dividend yield of 5.5%. Empire State Realty Trust pays out 66.7% of its earnings in the form of a dividend. CubeSmart pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CubeSmart has increased its dividend for 16 consecutive years. CubeSmart is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Empire State Realty Trust and CubeSmart”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Empire State Realty Trust	$766.18 million	1.65	$51.64 million	$0.21	35.46
CubeSmart	$1.11 billion	7.73	$391.18 million	$1.56	24.07

CubeSmart has higher revenue and earnings than Empire State Realty Trust. CubeSmart is trading at a lower price-to-earnings ratio than Empire State Realty Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Empire State Realty Trust and CubeSmart’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Empire State Realty Trust	4.96%	2.13%	0.90%
CubeSmart	35.44%	13.12%	5.76%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Empire State Realty Trust and CubeSmart, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Empire State Realty Trust	1	2	2	0	2.20
CubeSmart	0	10	8	0	2.44

Empire State Realty Trust presently has a consensus target price of $10.43, indicating a potential upside of 40.10%. CubeSmart has a consensus target price of $45.94, indicating a potential upside of 22.36%. Given Empire State Realty Trust’s higher possible upside, analysts plainly believe Empire State Realty Trust is more favorable than CubeSmart.

Summary

CubeSmart beats Empire State Realty Trust on 12 of the 17 factors compared between the two stocks.

About Empire State Realty Trust

Empire State Realty Trust, Inc. (NYSE: ESRT) is a NYC-focused REIT that owns and operates a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets. The company is the recognized leader in energy efficiency and indoor environmental quality. ESRT’s flagship Empire State Building – the “World’s Most Famous Building” – includes its Observatory, Tripadvisor’s 2023 Travelers’ Choice Awards: Best of the Best the #1 attraction in the US for two consecutive years. As of September 30, 2023, ESRT’s portfolio is comprised of approximately 8.6 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 727 residential units across three multifamily properties.

About CubeSmart

CubeSmart is a self-administered and self-managed real estate investment trust. The Company's self-storage properties are designed to offer affordable, easily accessible and, in most locations, climate-controlled storage space for residential and commercial customers. According to the 2023 Self-Storage Almanac, CubeSmart is one of the top three owners and operators of self-storage properties in the United States.