Analyzing Highwoods Properties (HIW) and Piedmont Office Realty Trust (PDM)
Highwoods Properties (NYSE: HIW) and Piedmont Office Realty Trust (NYSE:PDM) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.
This table compares Highwoods Properties and Piedmont Office Realty Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Piedmont Office Realty Trust||9.71%||2.67%||1.29%|
This is a breakdown of current ratings and price targets for Highwoods Properties and Piedmont Office Realty Trust, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Piedmont Office Realty Trust||0||1||1||0||2.50|
Highwoods Properties currently has a consensus price target of $54.67, indicating a potential upside of 5.57%. Piedmont Office Realty Trust has a consensus price target of $22.25, indicating a potential upside of 10.75%. Given Piedmont Office Realty Trust’s higher possible upside, analysts plainly believe Piedmont Office Realty Trust is more favorable than Highwoods Properties.
Institutional and Insider Ownership
98.4% of Highwoods Properties shares are held by institutional investors. Comparatively, 82.8% of Piedmont Office Realty Trust shares are held by institutional investors. 1.9% of Highwoods Properties shares are held by insiders. Comparatively, 0.8% of Piedmont Office Realty Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Volatility and Risk
Highwoods Properties has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500. Comparatively, Piedmont Office Realty Trust has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.
Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.4%. Piedmont Office Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 4.2%. 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. Piedmont Office Realty Trust pays out 221.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Piedmont Office Realty Trust has increased its dividend for 3 consecutive years. Piedmont Office Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares Highwoods Properties and Piedmont Office Realty Trust’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Highwoods Properties||$683.61 million||7.82||$366.80 million||$1.24||41.76|
|Piedmont Office Realty Trust||$579.79 million||5.04||$263.29 million||$0.38||52.87|
Highwoods Properties has higher revenue and earnings than Piedmont Office Realty Trust. Highwoods Properties is trading at a lower price-to-earnings ratio than Piedmont Office Realty Trust, indicating that it is currently the more affordable of the two stocks.
Highwoods Properties beats Piedmont Office Realty Trust on 13 of the 16 factors compared between the two stocks.
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.
Piedmont Office Realty Trust Company Profile
Piedmont Office Realty Trust, Inc. is an integrated self-managed real estate investment trust (REIT). The Company’s business consists primarily of owning, managing, operating, leasing, acquiring, developing, investing in, and disposing of office real estate assets. As of December 31, 2016, the Company owned and operated 65 in-service office properties, one redevelopment asset, two development assets and one office building through an unconsolidated joint venture. Its properties are located in areas, including New York, Chicago, Atlanta, Dallas, Boston, Minneapolis and Orlando. Its tenant base includes industries, such as business services, depository institutions, educational services, real estate, legal services and insurance carriers. The Company conducts business primarily through Piedmont Operating Partnership, L.P. (Piedmont OP). It performs the management of its buildings through its subsidiaries, including Piedmont Government Services, LLC and Piedmont Office Management, LLC.
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