Critical Review: Global Net Lease (GNL) vs. Realty Income Corporation (O)
Global Net Lease (NYSE: GNL) and Realty Income Corporation (NYSE:O) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.
Global Net Lease pays an annual dividend of $2.13 per share and has a dividend yield of 10.0%. Realty Income Corporation pays an annual dividend of $2.54 per share and has a dividend yield of 4.4%. Global Net Lease pays out 349.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Realty Income Corporation pays out 217.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Global Net Lease has increased its dividend for 21 consecutive years. Global Net Lease is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Global Net Lease has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500. Comparatively, Realty Income Corporation has a beta of 0.32, meaning that its stock price is 68% less volatile than the S&P 500.
This is a breakdown of recent ratings for Global Net Lease and Realty Income Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Global Net Lease||0||1||0||0||2.00|
|Realty Income Corporation||2||5||3||0||2.10|
Global Net Lease presently has a consensus target price of $24.45, indicating a potential upside of 14.79%. Realty Income Corporation has a consensus target price of $66.00, indicating a potential upside of 15.14%. Given Realty Income Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Realty Income Corporation is more favorable than Global Net Lease.
Insider & Institutional Ownership
40.7% of Global Net Lease shares are owned by institutional investors. Comparatively, 68.7% of Realty Income Corporation shares are owned by institutional investors. 0.2% of Global Net Lease shares are owned by company insiders. Comparatively, 0.3% of Realty Income Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This table compares Global Net Lease and Realty Income Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Global Net Lease||16.04%||2.91%||1.35%|
|Realty Income Corporation||29.19%||5.14%||2.62%|
Valuation and Earnings
This table compares Global Net Lease and Realty Income Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Global Net Lease||$233.85 million||6.13||$180.89 million||$0.61||34.92|
|Realty Income Corporation||$1.16 billion||13.54||$1.05 billion||$1.17||48.99|
Realty Income Corporation has higher revenue and earnings than Global Net Lease. Global Net Lease is trading at a lower price-to-earnings ratio than Realty Income Corporation, indicating that it is currently the more affordable of the two stocks.
Realty Income Corporation beats Global Net Lease on 14 of the 17 factors compared between the two stocks.
Global Net Lease Company Profile
Global Net Lease, Inc. is a real estate investment trust. The Company’s business consists of owning, managing, operating, leasing, acquiring, investing in and disposing of real estate assets. It owns and invests in commercial properties principally in the United States, the United Kingdom and continental Europe that are then leased to companies. It was formed to primarily acquire a portfolio of commercial properties, with an emphasis on sale-leaseback transactions involving single tenant net-leased commercial properties. As of December 31, 2016, it owned 310 properties consisting of 22 million rentable square feet. As of December 31, 2016, its owned 310 properties, including 241 properties located in the United States and Puerto Rico, 43 properties located in the United Kingdom and 26 properties located across continental Europe. It may also originate or acquire first mortgage loans secured by real estate. Its business is conducted through Global Net Lease Operating Partnership, L.P.
Realty Income Corporation Company Profile
Realty Income Corporation is a real estate investment trust (REIT). The Company is engaged in in-house acquisition, portfolio management, asset management, credit research, real estate research, legal, finance and accounting, information technology and capital markets capabilities. As of December 31, 2016, the Company owned a diversified portfolio of 4,944 properties located in 49 states and Puerto Rico, with over 83.0 million square feet of leasable space leased to 248 different commercial tenants doing business in 47 separate industries. As of December 31, 2016, of the 4,944 properties in the portfolio, 4,920, or 99.5%, were single-tenant properties, and the remaining were multi-tenant properties. As of December 31, 2016, of the 4,920 single-tenant properties, 4,836 were leased with a weighted average remaining lease term (excluding rights to extend a lease at the option of the tenant) of approximately 9.8 years.
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