Critical Survey: City Office REIT (NYSE:CIO) and CatchMark Timber Trust (NYSE:CTT)

City Office REIT (NYSE:CIO) and CatchMark Timber Trust (NYSE:CTT) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Dividends

City Office REIT pays an annual dividend of $0.80 per share and has a dividend yield of 4.0%. CatchMark Timber Trust pays an annual dividend of $0.30 per share and has a dividend yield of 3.5%. City Office REIT pays out 78.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CatchMark Timber Trust pays out 66.7% of its earnings in the form of a dividend. City Office REIT has increased its dividend for 1 consecutive years. City Office REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares City Office REIT and CatchMark Timber Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
City Office REIT 31.50% 15.56% 4.57%
CatchMark Timber Trust 19.08% 15.68% 3.71%

Institutional & Insider Ownership

75.3% of City Office REIT shares are held by institutional investors. Comparatively, 79.2% of CatchMark Timber Trust shares are held by institutional investors. 2.5% of City Office REIT shares are held by company insiders. Comparatively, 0.9% of CatchMark Timber Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

City Office REIT has a beta of 1.6, meaning that its share price is 60% more volatile than the S&P 500. Comparatively, CatchMark Timber Trust has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.

Valuation and Earnings

This table compares City Office REIT and CatchMark Timber Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
City Office REIT $160.84 million 5.42 $4.53 million $1.02 19.61
CatchMark Timber Trust $104.29 million 4.04 -$17.51 million $0.45 19.13

City Office REIT has higher revenue and earnings than CatchMark Timber Trust. CatchMark Timber Trust is trading at a lower price-to-earnings ratio than City Office REIT, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for City Office REIT and CatchMark Timber Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
City Office REIT 0 3 2 0 2.40
CatchMark Timber Trust 1 4 0 0 1.80

City Office REIT presently has a consensus target price of $17.40, suggesting a potential downside of 13.00%. CatchMark Timber Trust has a consensus target price of $10.83, suggesting a potential upside of 25.82%. Given CatchMark Timber Trust’s higher possible upside, analysts clearly believe CatchMark Timber Trust is more favorable than City Office REIT.

Summary

City Office REIT beats CatchMark Timber Trust on 13 of the 17 factors compared between the two stocks.

City Office REIT Company Profile

City Office REIT, Inc. is a real estate investment trust. It focuses on acquiring, owning and operating office properties located primarily in metropolitan areas in the Southern and Western United States. The company was founded on November 26, 2013 and is headquartered in Vancouver, Canada.

CatchMark Timber Trust Company Profile

CatchMark Timber Trust, Inc. engages in the ownership, management, acquisition, and disposition of timberlands. It operates through the following business segments: Harvest, Real Estate and Investment Management. The Harvest segment includes wholly-owned timber assets and associated timber sales, other revenues and related expenses. The Real Estate segment includes timberland sales, cost of timberland sales and large dispositions. The Investment Management segment includes investments in and income/loss from unconsolidated joint ventures and asset management fee revenues earned for management of these joint ventures. The company was founded on September 27, 2005 and is headquartered in Atlanta, GA.

Receive News & Ratings for City Office REIT Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for City Office REIT and related companies with MarketBeat.com's FREE daily email newsletter.