Critical Analysis: City Office REIT (NYSE:CIO) vs. Four Corners Property Trust (NYSE:FCPT)

City Office REIT (NYSE:CIO) and Four Corners Property Trust (NYSE:FCPT) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.

Insider and Institutional Ownership

67.5% of City Office REIT shares are held by institutional investors. Comparatively, 98.7% of Four Corners Property Trust shares are held by institutional investors. 3.9% of City Office REIT shares are held by company insiders. Comparatively, 1.1% of Four Corners Property Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for City Office REIT and Four Corners Property Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City Office REIT	0	1	0	0	2.00
Four Corners Property Trust	0	0	2	0	3.00

City Office REIT currently has a consensus target price of $7.00, indicating a potential upside of 60.55%. Four Corners Property Trust has a consensus target price of $26.33, indicating a potential upside of 15.80%. Given City Office REIT’s higher possible upside, research analysts plainly believe City Office REIT is more favorable than Four Corners Property Trust.

Dividends

City Office REIT pays an annual dividend of $0.40 per share and has a dividend yield of 9.2%. Four Corners Property Trust pays an annual dividend of $1.38 per share and has a dividend yield of 6.1%. City Office REIT pays out -160.0% of its earnings in the form of a dividend. Four Corners Property Trust pays out 127.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Four Corners Property Trust has raised its dividend for 7 consecutive years. City Office REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares City Office REIT and Four Corners Property Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
City Office REIT	-1.50%	-0.40%	-0.17%
Four Corners Property Trust	38.04%	7.78%	4.04%

Risk and Volatility

City Office REIT has a beta of 1.84, indicating that its share price is 84% more volatile than the S&P 500. Comparatively, Four Corners Property Trust has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.

Earnings and Valuation

This table compares City Office REIT and Four Corners Property Trust’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City Office REIT	$179.10 million	0.98	-$2.68 million	($0.25)	-17.44
Four Corners Property Trust	$250.61 million	8.35	$95.34 million	$1.08	21.06

Four Corners Property Trust has higher revenue and earnings than City Office REIT. City Office REIT is trading at a lower price-to-earnings ratio than Four Corners Property Trust, indicating that it is currently the more affordable of the two stocks.

Summary

Four Corners Property Trust beats City Office REIT on 12 of the 17 factors compared between the two stocks.

About City Office REIT

City Office REIT is an internally-managed real estate company focused on acquiring, owning and operating high-quality office properties located predominantly in Sun Belt markets. City Office currently owns or has a controlling interest in 5.7 million square feet of office properties. The Company has elected to be taxed as a real estate investment trust for U.S. federal income tax purposes.

About Four Corners Property Trust

FCPT, headquartered in Mill Valley, CA, is a real estate investment trust primarily engaged in the ownership, acquisition and leasing of restaurant and retail properties. The Company seeks to grow its portfolio by acquiring additional real estate to lease, on a net basis, for use in the restaurant and retail industries.