Douglas Emmett (NYSE: DEI) and Vereit (NYSE:VER) are both mid-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, earnings, profitability, valuation and risk.
Volatility and Risk
Douglas Emmett has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, Vereit has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500.
Douglas Emmett pays an annual dividend of $1.00 per share and has a dividend yield of 2.5%. Vereit pays an annual dividend of $0.55 per share and has a dividend yield of 7.2%. Douglas Emmett pays out 188.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Vereit pays out -423.1% of its earnings in the form of a dividend. Douglas Emmett has raised its dividend for 6 consecutive years and Vereit has raised its dividend for 2 consecutive years. Vereit is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares Douglas Emmett and Vereit’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Douglas Emmett||$742.55 million||9.15||$85.39 million||$0.53||75.59|
|Vereit||$1.45 billion||5.13||-$195.86 million||($0.13)||-58.92|
Douglas Emmett has higher earnings, but lower revenue than Vereit. Vereit is trading at a lower price-to-earnings ratio than Douglas Emmett, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
96.4% of Douglas Emmett shares are owned by institutional investors. Comparatively, 85.2% of Vereit shares are owned by institutional investors. 17.8% of Douglas Emmett shares are owned by insiders. Comparatively, 0.1% of Vereit shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
This table compares Douglas Emmett and Vereit’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current ratings and price targets for Douglas Emmett and Vereit, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Douglas Emmett presently has a consensus target price of $41.14, indicating a potential upside of 2.70%. Vereit has a consensus target price of $9.50, indicating a potential upside of 24.02%. Given Vereit’s stronger consensus rating and higher probable upside, analysts clearly believe Vereit is more favorable than Douglas Emmett.
Douglas Emmett beats Vereit on 10 of the 17 factors compared between the two stocks.
About Douglas Emmett
Douglas Emmett, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company is owner and operator of office and multifamily properties located in submarkets in Los Angeles and Honolulu. The Company operates through two segments: the acquisition, development, ownership and management of office real estate (Office Segment), and the acquisition, development, ownership and management of multifamily real estate (Multifamily Segment). The services for its Office segment include primarily rental of office space and other tenant services, including parking and storage space rental. The services for its Multifamily segment include primarily rental of apartments and other tenant services, including parking and storage space rental. It focuses on owning, acquiring developing and managing a substantial share of office properties and multifamily communities in neighborhoods.
VEREIT, Inc. is a full-service real estate operating company. The Company owns and manages a diversified portfolio of retail, restaurant, office and industrial real estate assets. It operates through two segments: real estate investment (REI) segment and its investment management segment, Cole Capital. The Company manages real estate investments on behalf of the Cole Capital. The Cole Capital segment sponsors and manages direct investment real estate programs, which primarily include publicly registered, non-traded real estate investment trusts (REITs). The Cole Capital segment’s operations are conducted through Cole Capital Advisors, Inc. (CCA), which is a subsidiary of the Operating Partnership. The Company’s portfolio consists of Industrial distribution, shopping centers and single-tenant retail. The Company serves in various industries, such as casual dining restaurants, manufacturing, quick service restaurants, grocery and super market, home and garden retail and logistics.
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