Paramount Group (PGRE) & Highwoods Properties (HIW) Critical Analysis
Paramount Group (NYSE: PGRE) and Highwoods Properties (NYSE:HIW) are both mid-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, profitability, dividends and risk.
This is a breakdown of recent recommendations for Paramount Group and Highwoods Properties, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Paramount Group currently has a consensus price target of $15.50, suggesting a potential downside of 1.59%. Highwoods Properties has a consensus price target of $54.67, suggesting a potential upside of 5.53%. Given Highwoods Properties’ stronger consensus rating and higher probable upside, analysts clearly believe Highwoods Properties is more favorable than Paramount Group.
Valuation & Earnings
This table compares Paramount Group and Highwoods Properties’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Paramount Group||$708.66 million||5.31||$384.89 million||$0.41||38.42|
|Highwoods Properties||$683.61 million||7.82||$366.80 million||$1.24||41.77|
Paramount Group has higher revenue and earnings than Highwoods Properties. Paramount Group is trading at a lower price-to-earnings ratio than Highwoods Properties, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
62.6% of Paramount Group shares are held by institutional investors. Comparatively, 98.4% of Highwoods Properties shares are held by institutional investors. 5.9% of Paramount Group shares are held by insiders. Comparatively, 1.9% of Highwoods Properties shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Risk and Volatility
Paramount Group has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500.
Paramount Group pays an annual dividend of $0.38 per share and has a dividend yield of 2.4%. Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.4%. Paramount Group pays out 92.7% 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 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.
This table compares Paramount Group and Highwoods Properties’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Highwoods Properties beats Paramount Group on 11 of the 16 factors compared between the two stocks.
Paramount Group Company Profile
Paramount Group, Inc. is a fully-integrated real estate investment trust (REIT) focused on owning, operating, managing, acquiring and redeveloping Class A office properties in select central business district submarkets of New York City, Washington, District of Columbia (D.C.) and San Francisco. The Company conducts its business through, and substantially all its interests in properties and investments are held by, Paramount Group Operating Partnership LP (the Operating Partnership). The Company’s segments include New York, Washington, D.C. and San Francisco. As of December 31, 2016, the Company’s portfolio consisted of 13 Class A office properties aggregating approximately 10.8 million square feet that was 93.3% leased and 90.9% occupied. The Company also has an investment management business, where it serves as the general partner and property manager of certain private equity real estate funds for institutional investors and high-net-worth individuals.
Highwoods Properties Company Profile
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.
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