Financial Analysis: Douglas Emmett (DEI) & NRF Holdco (NRF)

Douglas Emmett (NYSE: DEI) and NRF Holdco (NYSE:NRF) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, analyst recommendations and earnings.

Profitability

This table compares Douglas Emmett and NRF Holdco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Douglas Emmett 11.29% 2.58% 1.08%
NRF Holdco -16.61% -17.86% -2.44%

Dividends

Douglas Emmett pays an annual dividend of $1.00 per share and has a dividend yield of 2.8%. NRF Holdco pays an annual dividend of $1.60 per share and has a dividend yield of 9.9%. Douglas Emmett pays out 188.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NRF Holdco pays out -88.9% of its earnings in the form of a dividend. NRF Holdco has raised its dividend for 7 consecutive years. NRF Holdco is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings for Douglas Emmett and NRF Holdco, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Douglas Emmett 2 7 2 0 2.00
NRF Holdco 0 0 0 0 N/A

Douglas Emmett currently has a consensus target price of $41.25, suggesting a potential upside of 14.77%. Given Douglas Emmett’s higher probable upside, equities research analysts clearly believe Douglas Emmett is more favorable than NRF Holdco.

Institutional and Insider Ownership

96.7% of Douglas Emmett shares are held by institutional investors. Comparatively, 69.7% of NRF Holdco shares are held by institutional investors. 17.8% of Douglas Emmett shares are held by insiders. Comparatively, 2.4% of NRF Holdco shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Douglas Emmett has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500. Comparatively, NRF Holdco has a beta of 1.73, indicating that its share price is 73% more volatile than the S&P 500.

Earnings and Valuation

This table compares Douglas Emmett and NRF Holdco’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Douglas Emmett $742.55 million 8.20 $85.39 million $0.53 67.81
NRF Holdco N/A N/A N/A ($1.80) -8.96

Douglas Emmett has higher revenue and earnings than NRF Holdco. NRF Holdco is trading at a lower price-to-earnings ratio than Douglas Emmett, indicating that it is currently the more affordable of the two stocks.

Summary

Douglas Emmett beats NRF Holdco on 10 of the 14 factors compared between the two stocks.

About Douglas Emmett

Douglas Emmett, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company is owner and operator of office and multifamily properties located in submarkets in Los Angeles and Honolulu. The Company operates through two segments: the acquisition, development, ownership and management of office real estate (Office Segment), and the acquisition, development, ownership and management of multifamily real estate (Multifamily Segment). The services for its Office segment include primarily rental of office space and other tenant services, including parking and storage space rental. The services for its Multifamily segment include primarily rental of apartments and other tenant services, including parking and storage space rental. It focuses on owning, acquiring developing and managing a substantial share of office properties and multifamily communities in neighborhoods.

About NRF Holdco

NRF Holdco LLC. is a commercial real estate company. The Company invests in multiple asset classes across commercial real estate (CRE). Its portfolio consists of healthcare, hotel, manufactured housing communities, net lease and multifamily properties. The Company also invests in other opportunistic real estate investments, such as indirect interests in real estate through its investments in private equity funds (PE Investments). The Company also acquires and operates hotel and certain healthcare properties. The Company’s segments include Real Estate, Commercial Real Estate Debt (CRE debt), Commercial Real Estate Securities, N-Star CDOs and Corporate. Its real estate equity investments that operate under the REIT Investment Diversification and Empowerment Act (RIDEA) structure generate resident and hotel guest related income from short-term residential agreements. The Company is externally managed and advised by an affiliate of NorthStar Asset Management Group Inc.

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