STORE Capital Corporation (NYSE: STOR) and Select Income REIT (NASDAQ:SIR) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, earnings, analyst recommendations, valuation, dividends and institutional ownership.

Analyst Ratings

This is a summary of current recommendations and price targets for STORE Capital Corporation and Select Income REIT, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
STORE Capital Corporation 0 4 7 0 2.64
Select Income REIT 0 0 1 0 3.00

STORE Capital Corporation currently has a consensus target price of $27.22, suggesting a potential upside of 5.72%. Select Income REIT has a consensus target price of $34.00, suggesting a potential upside of 37.99%. Given Select Income REIT’s stronger consensus rating and higher possible upside, analysts clearly believe Select Income REIT is more favorable than STORE Capital Corporation.

Volatility and Risk

STORE Capital Corporation has a beta of 0.23, indicating that its share price is 77% less volatile than the S&P 500. Comparatively, Select Income REIT has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.

Dividends

STORE Capital Corporation pays an annual dividend of $1.24 per share and has a dividend yield of 4.8%. Select Income REIT pays an annual dividend of $2.04 per share and has a dividend yield of 8.3%. STORE Capital Corporation pays out 126.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Select Income REIT pays out 210.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares STORE Capital Corporation and Select Income REIT’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
STORE Capital Corporation $421.32 million 11.59 $381.86 million $0.98 26.28
Select Income REIT N/A N/A N/A $0.97 25.40

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

Institutional & Insider Ownership

48.2% of Select Income REIT shares are held by institutional investors. 0.9% of STORE Capital Corporation shares are held by company insiders. Comparatively, 2.0% of Select Income REIT shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares STORE Capital Corporation and Select Income REIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
STORE Capital Corporation 38.71% 5.98% 3.10%
Select Income REIT 18.65% 4.18% 1.85%

Summary

STORE Capital Corporation beats Select Income REIT on 8 of the 14 factors compared between the two stocks.

About STORE Capital Corporation

STORE Capital Corporation is an internally managed net-lease real estate investment trust. The Company is engaged in the acquisition, investment and management of single tenant operational real estate (STORE) properties. As of December 31, 2016, the Company owned a portfolio that consisted of investments in 1,660 property locations operated by 360 customers across 48 states. Its customers operate across a range of industries within the service, retail and manufacturing sectors of the United States economy, with restaurants, early childhood education centers, movie theaters, health clubs and furniture stores. The Company’s portfolio includes investments in approximately 1,330 property locations operated by over 300 customers across approximately 50 states. The Company provides real estate financing solutions principally to businesses that own STORE properties and operate within the broad-based service, retail and industrial sectors of the United States economy.

About Select Income REIT

Select Income REIT is a real estate investment trust. The Company is engaged in the ownership of properties that include buildings and leased industrial lands that are primarily net leased to single tenants. As of December 31, 2016, the Company owned 121 properties (362 buildings, leasable land parcels and easements) with approximately 44.8 million rentable square feet. As of December 31, 2016, the Company’s properties consisted of 110 office and industrial properties (133 buildings) with approximately 27.0 million square feet located in 34 states throughout the mainland United States (Mainland Properties), and 11 properties (229 buildings, leasable land parcels and easements) located on the island of Oahu, Hawaii, with approximately 17.8 million rentable square feet that are primarily leased to industrial and commercial tenants (Hawaii Properties). As of December 31, 2016, the Company’s properties were leased to 312 different tenants.

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