Select Income REIT (SIR) versus Vornado Realty Trust (NYSE:VNO) Critical Analysis
Vornado Realty Trust (NYSE: VNO) and Select Income REIT (NASDAQ:SIR) are both mid-cap financials companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.
Volatility and Risk
Vornado Realty Trust has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Select Income REIT has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.
This table compares Vornado Realty Trust and Select Income REIT’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Vornado Realty Trust||7.03%||1.61%||0.79%|
|Select Income REIT||19.15%||4.36%||1.91%|
Institutional & Insider Ownership
86.0% of Vornado Realty Trust shares are held by institutional investors. Comparatively, 47.8% of Select Income REIT shares are held by institutional investors. 9.8% of Vornado Realty Trust 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, endowments and hedge funds believe a company is poised for long-term growth.
Earnings and Valuation
This table compares Vornado Realty Trust and Select Income REIT’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Vornado Realty Trust||$2.51 billion||5.39||$906.91 million||$4.20||16.94|
|Select Income REIT||$462.01 million||4.33||$116.32 million||$1.00||22.37|
Vornado Realty Trust has higher revenue and earnings than Select Income REIT. Vornado Realty Trust is trading at a lower price-to-earnings ratio than Select Income REIT, indicating that it is currently the more affordable of the two stocks.
Vornado Realty Trust pays an annual dividend of $2.40 per share and has a dividend yield of 3.4%. Select Income REIT pays an annual dividend of $2.04 per share and has a dividend yield of 9.1%. Vornado Realty Trust pays out 57.1% of its earnings in the form of a dividend. Select Income REIT pays out 204.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This is a breakdown of recent recommendations for Vornado Realty Trust and Select Income REIT, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Vornado Realty Trust||0||4||7||0||2.64|
|Select Income REIT||0||1||2||0||2.67|
Vornado Realty Trust presently has a consensus target price of $90.10, suggesting a potential upside of 26.63%. Select Income REIT has a consensus target price of $19.75, suggesting a potential downside of 11.71%. Given Vornado Realty Trust’s higher probable upside, equities research analysts plainly believe Vornado Realty Trust is more favorable than Select Income REIT.
Vornado Realty Trust beats Select Income REIT on 10 of the 16 factors compared between the two stocks.
About Vornado Realty Trust
Vornado Realty Trust is a real estate investment trust (REIT). The Company conducts its business through Vornado Realty L.P. (the Operating Partnership). The Company operates through two segments: New York and Washington, DC. As of December 31, 2016, the Company’s New York segment consisted of 28.3 million square feet in 86 properties. Its properties include 1290 Avenue of the Americas, Two Penn Plaza, 770 Broadway and 90 Park Avenue. As of December 31, 2016, the Company’s Washington, DC segment consisted of 58 properties aggregating 14.7 million square feet, including 11.1 million square feet of office space in 44 properties, nine residential properties containing 3,156 units and a hotel property. Its properties include 2001 Jefferson Davis Highway, 223 23rd Street, 2221 South Clark Street and 1700 M Street. The Company’s interests in properties are held by the Operating Partnership. As of December 31, 2016, the Company owned the 3.7 million square foot Mart (theMart) in Chicago.
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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