Analyzing Paramount Group (PGRE) and NorthStar Realty Europe Corp. (NRE)
Paramount Group (NYSE: PGRE) and NorthStar Realty Europe Corp. (NYSE:NRE) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.
Paramount Group pays an annual dividend of $0.38 per share and has a dividend yield of 2.3%. NorthStar Realty Europe Corp. pays an annual dividend of $0.60 per share and has a dividend yield of 4.4%. 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. NorthStar Realty Europe Corp. pays out -133.3% of its earnings in the form of a dividend. NorthStar Realty Europe Corp. is clearly the better dividend stock, given its higher yield and lower payout ratio.
Volatility and Risk
Paramount Group has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, NorthStar Realty Europe Corp. has a beta of 2.49, meaning that its stock price is 149% more volatile than the S&P 500.
This is a summary of current ratings and target prices for Paramount Group and NorthStar Realty Europe Corp., as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|NorthStar Realty Europe Corp.||0||0||1||0||3.00|
Paramount Group currently has a consensus target price of $15.50, suggesting a potential downside of 4.26%. NorthStar Realty Europe Corp. has a consensus target price of $16.50, suggesting a potential upside of 20.09%. Given NorthStar Realty Europe Corp.’s stronger consensus rating and higher probable upside, analysts clearly believe NorthStar Realty Europe Corp. is more favorable than Paramount Group.
Institutional and Insider Ownership
62.3% of Paramount Group shares are held by institutional investors. Comparatively, 69.9% of NorthStar Realty Europe Corp. shares are held by institutional investors. 5.9% of Paramount Group shares are held by company insiders. Comparatively, 2.2% of NorthStar Realty Europe Corp. shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Paramount Group and NorthStar Realty Europe Corp.’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Paramount Group||$708.66 million||5.45||$384.89 million||$0.41||39.49|
|NorthStar Realty Europe Corp.||$131.25 million||5.79||$37.01 million||($0.45)||-30.53|
Paramount Group has higher revenue and earnings than NorthStar Realty Europe Corp.. NorthStar Realty Europe Corp. is trading at a lower price-to-earnings ratio than Paramount Group, indicating that it is currently the more affordable of the two stocks.
This table compares Paramount Group and NorthStar Realty Europe Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|NorthStar Realty Europe Corp.||-18.57%||7.73%||2.46%|
NorthStar Realty Europe Corp. beats Paramount Group on 9 of the 14 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.
NorthStar Realty Europe Corp. Company Profile
NorthStar Realty Europe Corp. is a real estate investment trust (REIT). The Company is a European focused commercial real estate company with primary office properties in cities within Germany, the United Kingdom and France. Its objective is to provide its stockholders with stable and recurring cash flow supplemented by capital growth over time. The Company conducts its business through two segments: Real Estate and Corporate. Its European commercial real estate business is primarily focused on office properties. Its portfolio consists of approximately 48 properties and a total of approximately 495,588 square meters of rentable space, located in various European markets, including Frankfurt, Hamburg, Berlin, London, Paris, Amsterdam, Milan, Brussels and Madrid. Its overall portfolio is over 87% occupied. In addition, it owns over two hotels, which are leased to third-party operators. It is externally managed and advised by an affiliate of NorthStar Asset Management Group Inc. (NSAM).
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