Critical Review: Equity Commonwealth (EQC) and City Office REIT (CIO)
Equity Commonwealth (NYSE: EQC) and City Office REIT (NYSE:CIO) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, institutional ownership, risk, profitability, valuation and analyst recommendations.
This is a breakdown of current recommendations for Equity Commonwealth and City Office REIT, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|City Office REIT||0||1||3||0||2.75|
Equity Commonwealth currently has a consensus price target of $33.00, suggesting a potential upside of 8.20%. City Office REIT has a consensus price target of $14.83, suggesting a potential upside of 11.19%. Given City Office REIT’s stronger consensus rating and higher possible upside, analysts clearly believe City Office REIT is more favorable than Equity Commonwealth.
Valuation and Earnings
This table compares Equity Commonwealth and City Office REIT’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Equity Commonwealth||$409.33 million||9.25||$194.30 million||$0.86||35.47|
|City Office REIT||$90.65 million||4.45||$47.13 million||($0.13)||-102.62|
Equity Commonwealth has higher revenue and earnings than City Office REIT. City 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.
Insider & Institutional Ownership
94.1% of Equity Commonwealth shares are held by institutional investors. Comparatively, 55.4% of City Office REIT shares are held by institutional investors. 1.0% of Equity Commonwealth shares are held by company insiders. Comparatively, 3.2% of City Office REIT shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
City Office REIT pays an annual dividend of $0.94 per share and has a dividend yield of 7.0%. Equity Commonwealth does not pay a dividend. City Office REIT pays out -723.1% of its earnings in the form of a dividend.
This table compares Equity Commonwealth and City Office REIT’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|City Office REIT||3.70%||1.91%||0.51%|
Risk and Volatility
Equity Commonwealth has a beta of 0.14, meaning that its share price is 86% less volatile than the S&P 500. Comparatively, City Office REIT has a beta of 0.24, meaning that its share price is 76% less volatile than the S&P 500.
Equity Commonwealth beats City Office REIT on 9 of the 16 factors compared between the two stocks.
Equity Commonwealth Company Profile
Equity Commonwealth is an internally managed and self-advised real estate investment trust. The Company is engaged in the ownership and operation primarily of office buildings across the United States. The Company conducts its activities primarily through EQC Operating Trust (the Operating Trust). As of August 14, 2017, the Company’s portfolio included 20 properties and 11 million square feet. As of December 31, 2016, its properties included Parkshore Plaza; 1225 Seventeenth Street; 1601 Dry Creek Drive; 97 Newberry Road; 33 Stiles Lane; 802 Delaware Avenue; 6600 North Military Trail; East Eisenhower Parkway; 2250 Pilot Knob Road; 411 Farwell Avenue; Cherrington Corporate Center; 1500 Market Street; Foster Plaza; 4515 Seton Center Parkway; Bridgepoint Square, and Research Park. As of December 31, 2016, the Company’s land parcels included 625 Crane Street and Cabot Business Park Land.
City Office REIT Company Profile
City Office REIT, Inc. is a real estate investment trust. The Company is focused on acquiring, owning and operating office properties located primarily in metropolitan areas in the Southern and Western United States. It conducts its operations primarily through City Office REIT Operating Partnership, L.P. (the Operating Partnership). As of December 31, 2016, it owned 18 office complexes consisting of 37 office buildings with a total of approximately 4.4 million square feet of net rentable area (NRA) in the metropolitan areas of Boise, Dallas, Denver, Orlando, Phoenix, Portland and Tampa. Its properties include Park Tower, City Center, Intellicenter and Carillon Point in Tampa, Florida; Cherry Creek, Plaza 25, DTC Crossroads, Superior Pointe and Logan Tower in Denver, Colorado; Washington Group Plaza in Boise, Idaho; FRP Collection, Central Fairwinds and FRP Ingenuity Drive in Orlando, Florida; 190 Office Center and Lake Vista Pointe in Dallas, Texas, and SanTan in Phoenix, Arizona.
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