Equity Commonwealth (NYSE: EQC) and Hudson Pacific Properties (NYSE:HPP) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, analyst recommendations, institutional ownership and risk.

Dividends

Hudson Pacific Properties pays an annual dividend of $1.00 per share and has a dividend yield of 3.1%. Equity Commonwealth does not pay a dividend. Hudson Pacific Properties pays out 277.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Equity Commonwealth and Hudson Pacific Properties, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Equity Commonwealth 0 2 0 0 2.00
Hudson Pacific Properties 0 2 6 0 2.75

Equity Commonwealth currently has a consensus target price of $32.50, suggesting a potential upside of 5.18%. Hudson Pacific Properties has a consensus target price of $37.93, suggesting a potential upside of 17.03%. Given Hudson Pacific Properties’ stronger consensus rating and higher possible upside, analysts plainly believe Hudson Pacific Properties is more favorable than Equity Commonwealth.

Profitability

This table compares Equity Commonwealth and Hudson Pacific Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Equity Commonwealth 28.50% 3.69% 2.52%
Hudson Pacific Properties 7.87% 1.37% 0.79%

Risk and Volatility

Equity Commonwealth has a beta of 0.13, suggesting that its share price is 87% less volatile than the S&P 500. Comparatively, Hudson Pacific Properties has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Earnings & Valuation

This table compares Equity Commonwealth and Hudson Pacific Properties’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Equity Commonwealth $409.33 million 9.37 $194.30 million $0.86 35.93
Hudson Pacific Properties $680.57 million 7.40 $289.13 million $0.36 90.03

Hudson Pacific Properties has higher revenue and earnings than Equity Commonwealth. Equity Commonwealth is trading at a lower price-to-earnings ratio than Hudson Pacific Properties, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

94.5% of Equity Commonwealth shares are owned by institutional investors. 1.0% of Equity Commonwealth shares are owned by company insiders. Comparatively, 13.4% of Hudson Pacific Properties shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Hudson Pacific Properties beats Equity Commonwealth on 9 of the 16 factors compared between the two stocks.

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.

About Hudson Pacific Properties

Hudson Pacific Properties, Inc. is a real estate investment trust (REIT). The Company operates in two segments: office properties, and media and entertainment properties. The Company is focused on acquiring, repositioning, developing and operating office and media and entertainment properties in submarkets throughout Northern and Southern California and the Pacific Northwest. As of December 31, 2016, the Company’s portfolio included office properties consisting of an aggregate of approximately 14.1 million square feet, and media and entertainment properties consisting of approximately 0.9 million square feet of sound-stage, office and supporting production facilities. As of December 31, 2016, the Company also owned undeveloped density rights for approximately 2.5 million square feet of future office and residential space. The Company’s in-service office properties include stabilized office properties and lease-up office properties.

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