Contrasting Digital Realty Trust (DLR) and VEREIT (VER)
Digital Realty Trust (NYSE: DLR) and VEREIT (NYSE:VER) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, dividends, profitability, earnings, risk, analyst recommendations and institutional ownership.
This is a breakdown of recent ratings and recommmendations for Digital Realty Trust and VEREIT, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Digital Realty Trust||0||8||6||0||2.43|
Earnings & Valuation
This table compares Digital Realty Trust and VEREIT’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Digital Realty Trust||$2.14 billion||11.01||$426.18 million||$1.24||92.59|
|VEREIT||$1.45 billion||5.31||-$195.86 million||($0.10)||-79.29|
Digital Realty Trust has higher revenue and earnings than VEREIT. VEREIT is trading at a lower price-to-earnings ratio than Digital Realty Trust, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
98.5% of Digital Realty Trust shares are owned by institutional investors. Comparatively, 85.3% of VEREIT shares are owned by institutional investors. 0.4% of Digital Realty Trust shares are owned by company insiders. Comparatively, 0.1% of VEREIT shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Risk and Volatility
Digital Realty Trust has a beta of -0.1, indicating that its stock price is 110% less volatile than the S&P 500. Comparatively, VEREIT has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.
This table compares Digital Realty Trust and VEREIT’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Digital Realty Trust||11.71%||5.15%||1.97%|
Digital Realty Trust pays an annual dividend of $3.72 per share and has a dividend yield of 3.2%. VEREIT pays an annual dividend of $0.55 per share and has a dividend yield of 6.9%. Digital Realty Trust pays out 300.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. VEREIT pays out -549.9% of its earnings in the form of a dividend. Digital Realty Trust has increased its dividend for 12 consecutive years. VEREIT is clearly the better dividend stock, given its higher yield and lower payout ratio.
Digital Realty Trust beats VEREIT on 12 of the 17 factors compared between the two stocks.
About Digital Realty Trust
Digital Realty Trust, Inc. is a real estate investment trust (REIT). The Company is engaged in the business of owning, acquiring, developing and operating data centers. The Company is focused on providing data center and colocation solutions for domestic and international tenants across a range of industry verticals ranging from financial services, cloud and information technology services, to manufacturing, energy, healthcare and consumer products. As of December 31, 2016, its portfolio consisted of 145 operating properties, including 14 properties held as investments in unconsolidated joint ventures, of which 104 are located throughout the United States, 32 are located in Europe, four are located in Asia, three are located in Australia and two are located in Canada. It is a general partner of Digital Realty Trust, L.P. As of December 31, 2016, it owned an approximate 98.5% common general partnership interest in Digital Realty Trust, L.P.
VEREIT, Inc. is a full-service real estate operating company. The Company owns and manages a diversified portfolio of retail, restaurant, office and industrial real estate assets. It operates through two segments: real estate investment (REI) segment and its investment management segment, Cole Capital. The Company manages real estate investments on behalf of the Cole Capital. The Cole Capital segment sponsors and manages direct investment real estate programs, which primarily include publicly registered, non-traded real estate investment trusts (REITs). The Cole Capital segment’s operations are conducted through Cole Capital Advisors, Inc. (CCA), which is a subsidiary of the Operating Partnership. The Company’s portfolio consists of Industrial distribution, shopping centers and single-tenant retail. The Company serves in various industries, such as casual dining restaurants, manufacturing, quick service restaurants, grocery and super market, home and garden retail and logistics.
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