Contrasting Paramount Group (PGRE) & TIER REIT (TIER)

Paramount Group (NYSE: PGRE) and TIER REIT (NYSE:TIER) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, risk, earnings, dividends and valuation.

Volatility & Risk

Paramount Group has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500. Comparatively, TIER REIT has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Valuation and Earnings

This table compares Paramount Group and TIER REIT’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Paramount Group $683.34 million 5.24 -$9.93 million $0.37 40.32
TIER REIT $242.82 million 3.85 -$29.41 million $1.82 10.73

Paramount Group has higher revenue and earnings than TIER REIT. TIER REIT is trading at a lower price-to-earnings ratio than Paramount Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Paramount Group and TIER REIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Paramount Group 12.29% 1.76% 0.99%
TIER REIT 40.68% 12.86% 5.60%

Institutional & Insider Ownership

62.2% of Paramount Group shares are owned by institutional investors. Comparatively, 57.5% of TIER REIT shares are owned by institutional investors. 5.7% of Paramount Group shares are owned by insiders. Comparatively, 1.2% of TIER REIT shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Paramount Group pays an annual dividend of $0.38 per share and has a dividend yield of 2.5%. TIER REIT pays an annual dividend of $0.72 per share and has a dividend yield of 3.7%. Paramount Group pays out 102.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TIER REIT pays out 39.6% of its earnings in the form of a dividend. TIER REIT has raised its dividend for 2 consecutive years. TIER REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Paramount Group and TIER REIT, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Paramount Group 3 0 2 0 1.80
TIER REIT 0 0 3 0 3.00

Paramount Group presently has a consensus target price of $16.00, indicating a potential upside of 7.24%. TIER REIT has a consensus target price of $21.00, indicating a potential upside of 7.53%. Given TIER REIT’s stronger consensus rating and higher possible upside, analysts clearly believe TIER REIT is more favorable than Paramount Group.

Summary

TIER REIT beats Paramount Group on 11 of the 17 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.

TIER REIT Company Profile

TIER REIT, Inc. is a real estate investment trust. The Company’s business consists of owning, acquiring, developing, operating, investing in, and disposing of real estate assets. The Company’s business is conducted through Tier Operating Partnership LP (Tier OP). As of December 31, 2016, the Company owned interests in 29 operating office properties, one non-operating property and one development property located in 13 markets throughout the United States. It owns properties located in metropolitan cities and suburban markets in the United States. The Company’s office properties include The Terrace Office Park, Domain 3, Domain 4, 5950 Sherry Lane, Burnett Plaza, Loop Central, One BriarLake Plaza, Three Eldridge Place, Eisenhower I, Forum Office Park, 500 E. Pratt, Woodcrest Corporate Center and 111 Woodcrest. The Company’s properties are located in Austin, Dallas, Houston, Charlotte, Nashville, Atlanta and Denver.

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