TIER REIT (TIER) versus Equity Commonwealth (EQC) Financial Analysis

TIER REIT (NYSE: TIER) and Equity Commonwealth (NYSE:EQC) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, dividends, analyst recommendations, profitability, valuation and risk.

Dividends

TIER REIT pays an annual dividend of $0.72 per share and has a dividend yield of 3.6%. Equity Commonwealth does not pay a dividend. TIER REIT pays out 39.6% of its earnings in the form of a dividend.

Profitability

This table compares TIER REIT and Equity Commonwealth’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TIER REIT 40.68% 12.86% 5.60%
Equity Commonwealth 17.04% 2.00% 1.43%

Risk and Volatility

TIER REIT has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, Equity Commonwealth has a beta of 0.09, meaning that its share price is 91% less volatile than the S&P 500.

Institutional and Insider Ownership

58.4% of TIER REIT shares are held by institutional investors. Comparatively, 94.9% of Equity Commonwealth shares are held by institutional investors. 1.2% of TIER REIT shares are held by company insiders. Comparatively, 1.0% of Equity Commonwealth shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares TIER REIT and Equity Commonwealth’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
TIER REIT $242.82 million 3.90 -$29.41 million $1.82 10.87
Equity Commonwealth $500.68 million 7.47 $232.89 million $0.44 68.50

Equity Commonwealth has higher revenue and earnings than TIER REIT. TIER 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.

Analyst Ratings

This is a summary of recent recommendations and price targets for TIER REIT and Equity Commonwealth, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TIER REIT 0 0 2 0 3.00
Equity Commonwealth 0 1 0 0 2.00

TIER REIT presently has a consensus price target of $20.50, suggesting a potential upside of 3.59%. Equity Commonwealth has a consensus price target of $31.00, suggesting a potential upside of 2.85%. Given TIER REIT’s stronger consensus rating and higher possible upside, equities research analysts clearly believe TIER REIT is more favorable than Equity Commonwealth.

Summary

TIER REIT beats Equity Commonwealth on 10 of the 16 factors compared between the two stocks.

About TIER REIT

TIER REIT, Inc. is a real estate investment trust. The Company’s business consists of owning, acquiring, developing, operating, investing in, and disposing of real estate assets. The Company’s business is conducted through Tier Operating Partnership LP (Tier OP). As of December 31, 2016, the Company owned interests in 29 operating office properties, one non-operating property and one development property located in 13 markets throughout the United States. It owns properties located in metropolitan cities and suburban markets in the United States. The Company’s office properties include The Terrace Office Park, Domain 3, Domain 4, 5950 Sherry Lane, Burnett Plaza, Loop Central, One BriarLake Plaza, Three Eldridge Place, Eisenhower I, Forum Office Park, 500 E. Pratt, Woodcrest Corporate Center and 111 Woodcrest. The Company’s properties are located in Austin, Dallas, Houston, Charlotte, Nashville, Atlanta and Denver.

About Equity Commonwealth

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.

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