Lexington Realty Trust (NYSE: LXP) and Realty Income Corporation (NYSE:O) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, earnings, profitabiliy, analyst recommendations, institutional ownership, valuation and dividends.

Institutional & Insider Ownership

72.1% of Lexington Realty Trust shares are held by institutional investors. Comparatively, 68.7% of Realty Income Corporation shares are held by institutional investors. 3.1% of Lexington Realty Trust shares are held by insiders. Comparatively, 0.3% of Realty Income Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Lexington Realty Trust and Realty Income Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lexington Realty Trust $393.09 million 5.99 $315.40 million $0.14 70.00
Realty Income Corporation $1.16 billion 13.47 $1.05 billion $1.17 48.74

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

Profitability

This table compares Lexington Realty Trust and Realty Income Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lexington Realty Trust 9.80% 2.92% 1.13%
Realty Income Corporation 29.19% 5.14% 2.62%

Dividends

Lexington Realty Trust pays an annual dividend of $0.70 per share and has a dividend yield of 7.1%. Realty Income Corporation pays an annual dividend of $2.54 per share and has a dividend yield of 4.5%. Lexington Realty Trust pays out 500.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Realty Income Corporation pays out 217.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lexington Realty Trust has increased its dividend for 21 consecutive years and Realty Income Corporation has increased its dividend for 6 consecutive years. Lexington Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Lexington Realty Trust has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, Realty Income Corporation has a beta of 0.32, meaning that its stock price is 68% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Lexington Realty Trust and Realty Income Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lexington Realty Trust 1 4 1 0 2.00
Realty Income Corporation 2 5 3 0 2.10

Lexington Realty Trust presently has a consensus target price of $10.50, suggesting a potential upside of 7.14%. Realty Income Corporation has a consensus target price of $66.00, suggesting a potential upside of 15.75%. Given Realty Income Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Realty Income Corporation is more favorable than Lexington Realty Trust.

Summary

Realty Income Corporation beats Lexington Realty Trust on 11 of the 17 factors compared between the two stocks.

About Lexington Realty Trust

Lexington Realty Trust is a real estate investment trust (REIT). The Company owns a portfolio of equity and debt investments in single-tenant commercial properties. As of December 31, 2016, the Company had equity ownership interests in approximately 195 consolidated real estate properties, located in 40 states and containing an aggregate of approximately 43.3 million square feet of space, approximately 96.0% of which was leased. The Company conducts its operations either directly or indirectly through property owner subsidiaries and lender subsidiaries, which are single purpose entities; an operating partnership, Lepercq Corporate Income Fund L.P. (LCIF), in which the Company is the sole unit holder of the general partner and the sole unit holder of the limited partner that holds a majority of the limited partner interests; Lexington Realty Advisors, Inc. (LRA), a subsidiary of the Company, and investments in joint ventures.

About Realty Income Corporation

Realty Income Corporation is a real estate investment trust (REIT). The Company is engaged in in-house acquisition, portfolio management, asset management, credit research, real estate research, legal, finance and accounting, information technology and capital markets capabilities. As of December 31, 2016, the Company owned a diversified portfolio of 4,944 properties located in 49 states and Puerto Rico, with over 83.0 million square feet of leasable space leased to 248 different commercial tenants doing business in 47 separate industries. As of December 31, 2016, of the 4,944 properties in the portfolio, 4,920, or 99.5%, were single-tenant properties, and the remaining were multi-tenant properties. As of December 31, 2016, of the 4,920 single-tenant properties, 4,836 were leased with a weighted average remaining lease term (excluding rights to extend a lease at the option of the tenant) of approximately 9.8 years.

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