Paramount Group (NASDAQ: PGRE) and Piedmont Office Realty Trust (NYSE:PDM) are both mid-cap financials companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, profitability, risk, analyst recommendations, institutional ownership, dividends and earnings.

Institutional & Insider Ownership

82.8% of Piedmont Office Realty Trust shares are owned by institutional investors. 0.8% of Piedmont Office Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Piedmont Office Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 4.2%. Paramount Group does not pay a dividend. 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.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Paramount Group and Piedmont Office Realty Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Paramount Group 3 0 3 0 2.00
Piedmont Office Realty Trust 0 1 1 0 2.50

Paramount Group presently has a consensus target price of $16.10, indicating a potential upside of 0.00%. Piedmont Office Realty Trust has a consensus target price of $22.50, indicating a potential upside of 11.61%. Given Piedmont Office Realty Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Piedmont Office Realty Trust is more favorable than Paramount Group.

Valuation and Earnings

This table compares Paramount Group 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
Paramount Group $708.66 million 5.42 $384.89 million N/A N/A
Piedmont Office Realty Trust $579.79 million 5.06 $263.29 million $0.38 53.05

Paramount Group has higher revenue and earnings than Piedmont Office Realty Trust.

Profitability

This table compares Paramount Group and Piedmont Office Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Paramount Group 77.76% 10.10% 6.37%
Piedmont Office Realty Trust 9.71% 2.67% 1.29%

Summary

Paramount Group beats Piedmont Office Realty Trust on 9 of the 15 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.

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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