Financial Survey: Highwoods Properties (HIW) versus Corporate Office Properties Trust (OFC)
Highwoods Properties (NYSE: HIW) and Corporate Office Properties Trust (NYSE:OFC) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitabiliy and analyst recommendations.
Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.5%. Corporate Office Properties Trust pays an annual dividend of $1.10 per share and has a dividend yield of 3.4%. Highwoods Properties pays out 141.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Corporate Office Properties Trust pays out 150.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a breakdown of current ratings for Highwoods Properties and Corporate Office Properties Trust, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Corporate Office Properties Trust||2||7||1||0||1.90|
Highwoods Properties currently has a consensus price target of $54.67, suggesting a potential upside of 8.17%. Corporate Office Properties Trust has a consensus price target of $32.75, suggesting a potential upside of 0.83%. Given Highwoods Properties’ stronger consensus rating and higher probable upside, equities analysts plainly believe Highwoods Properties is more favorable than Corporate Office Properties Trust.
Earnings and Valuation
This table compares Highwoods Properties and Corporate Office Properties Trust’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Highwoods Properties||$683.61 million||7.63||$366.80 million||$1.24||40.76|
|Corporate Office Properties Trust||$578.09 million||5.59||$290.41 million||$0.73||44.49|
Highwoods Properties has higher revenue and earnings than Corporate Office Properties Trust. Highwoods Properties is trading at a lower price-to-earnings ratio than Corporate Office Properties Trust, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
97.9% of Highwoods Properties shares are owned by institutional investors. 1.9% of Highwoods Properties shares are owned by insiders. Comparatively, 0.6% of Corporate Office Properties Trust shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Volatility and Risk
Highwoods Properties has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500. Comparatively, Corporate Office Properties Trust has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.
This table compares Highwoods Properties and Corporate Office Properties Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Corporate Office Properties Trust||15.86%||6.55%||2.48%|
Highwoods Properties beats Corporate Office Properties Trust on 14 of the 16 factors compared between the two stocks.
About Highwoods Properties
Highwoods Properties, Inc. is an office real estate investment trust (REIT). The Company’s primary business is the operation, acquisition and development of office properties. The Company’s segments include Office and Other. The Company owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Greensboro, Memphis, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa. The Company conducts its activities through Highwoods Realty Limited Partnership (the Operating Partnership). The Company offers a range of real estate services to its customers. The Company offers services, including asset management, construction management, design and space planning, and renovation and re-positioning. The Company provides its customers with services, such as build-to-suit construction and space modification, including tenant improvements and expansions.
About Corporate Office Properties Trust
Corporate Office Properties Trust is a fully-integrated and self-managed real estate investment trust (REIT). The Company owns, manages, leases, develops and acquires office and data center properties. The Company’s segments are Defense/IT Locations; Regional Office; operating wholesale data center, and other. As of December 31, 2016, the Company’s properties included 164 operating office properties totaling 17.2 million square feet, including 13 triple-net leased, single-tenant data center properties; 11 office properties under construction or redevelopment; 1,028 acres of land controlled for future development, and a wholesale data center with a critical load of 19.25 megawatts. The Company conducts all of its operations through Corporate Office Properties, L.P. (COPLP) and subsidiaries (collectively, the Operating Partnership). COPLP owns real estate both directly and through subsidiary partnerships and limited liability companies (LLCs).
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