First Potomac Realty Trust (FPO) and Douglas Emmett (DEI) Financial Analysis

First Potomac Realty Trust (NYSE: FPO) and Douglas Emmett (NYSE:DEI) are both financials companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, profitability, risk, earnings and dividends.

Insider & Institutional Ownership

93.1% of First Potomac Realty Trust shares are owned by institutional investors. Comparatively, 96.4% of Douglas Emmett shares are owned by institutional investors. 2.1% of First Potomac Realty Trust shares are owned by insiders. Comparatively, 17.8% of Douglas Emmett shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares First Potomac Realty Trust and Douglas Emmett’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Potomac Realty Trust N/A N/A N/A $0.69 16.14
Douglas Emmett $742.55 million 8.30 $85.39 million $0.53 68.59

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

Risk and Volatility

First Potomac Realty Trust has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500. Comparatively, Douglas Emmett has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500.

Dividends

First Potomac Realty Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. Douglas Emmett pays an annual dividend of $1.00 per share and has a dividend yield of 2.8%. First Potomac Realty Trust pays out 58.0% of its earnings in the form of a dividend. 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. Douglas Emmett has raised its dividend for 7 consecutive years. First Potomac Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares First Potomac Realty Trust and Douglas Emmett’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Potomac Realty Trust -7.99% -2.35% -0.94%
Douglas Emmett 11.29% 2.58% 1.08%

Analyst Ratings

This is a summary of current ratings and price targets for First Potomac Realty Trust and Douglas Emmett, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Potomac Realty Trust 2 1 1 0 1.75
Douglas Emmett 2 7 2 0 2.00

First Potomac Realty Trust currently has a consensus target price of $11.29, suggesting a potential upside of 1.32%. Douglas Emmett has a consensus target price of $41.25, suggesting a potential upside of 13.45%. Given Douglas Emmett’s stronger consensus rating and higher possible upside, analysts plainly believe Douglas Emmett is more favorable than First Potomac Realty Trust.

Summary

Douglas Emmett beats First Potomac Realty Trust on 11 of the 15 factors compared between the two stocks.

About First Potomac Realty Trust

First Potomac Realty Trust (First Potomac) is engaged in ownership, management, redevelopment and development of office and business park properties in the greater Washington, D.C. region. The Company’s segments include Washington, D.C., Maryland, Northern Virginia and Southern Virginia. The Company conducts its business through First Potomac Realty Investment Limited Partnership, its operating partnership. The Company’s portfolio consist a mix of single-tenant and multi-tenant office properties, and business parks. The office properties are single-story and multi-story buildings that are primarily for office uses, and business parks consists of buildings with office features combined with some industrial property space. As of December 31, 2016, the Company owned properties totaling 6.7 million square feet and had a non-controlling ownership interest in properties totaling an additional 0.9 million square feet through five unconsolidated joint ventures.

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.

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