Financial Comparison: Service Properties Trust (NASDAQ:SVC) & Orion Office REIT (NYSE:ONL)

Service Properties Trust (NASDAQ:SVC) and Orion Office REIT (NYSE:ONL) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.

Dividends

Service Properties Trust pays an annual dividend of $0.04 per share and has a dividend yield of 2.0%. Orion Office REIT pays an annual dividend of $0.08 per share and has a dividend yield of 3.6%. Service Properties Trust pays out -2.4% of its earnings in the form of a dividend. Orion Office REIT pays out -3.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Orion Office REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Service Properties Trust has a beta of 1.47, indicating that its stock price is 47% more volatile than the S&P 500. Comparatively, Orion Office REIT has a beta of 1.4, indicating that its stock price is 40% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Service Properties Trust and Orion Office REIT, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Service Properties Trust	1	2	0	1	2.25
Orion Office REIT	1	1	1	0	2.00

Service Properties Trust presently has a consensus target price of $2.50, indicating a potential upside of 25.63%. Orion Office REIT has a consensus target price of $3.00, indicating a potential upside of 34.53%. Given Orion Office REIT’s higher probable upside, analysts clearly believe Orion Office REIT is more favorable than Service Properties Trust.

Insider and Institutional Ownership

77.6% of Service Properties Trust shares are owned by institutional investors. Comparatively, 79.9% of Orion Office REIT shares are owned by institutional investors. 1.4% of Service Properties Trust shares are owned by insiders. Comparatively, 0.2% of Orion Office REIT shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Service Properties Trust and Orion Office REIT”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Service Properties Trust	$1.90 billion	0.18	-$275.53 million	($1.67)	-1.19
Orion Office REIT	$150.79 million	0.83	-$103.01 million	($2.44)	-0.91

Orion Office REIT has lower revenue, but higher earnings than Service Properties Trust. Service Properties Trust is trading at a lower price-to-earnings ratio than Orion Office REIT, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Service Properties Trust and Orion Office REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Service Properties Trust	-14.83%	-37.94%	-3.97%
Orion Office REIT	-90.36%	-18.73%	-10.53%

Summary

Orion Office REIT beats Service Properties Trust on 9 of the 17 factors compared between the two stocks.

About Service Properties Trust

Service Properties Trust (Nasdaq: SVC) is a real estate investment trust with over $11 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of December 31, 2023, SVC owned 221 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of December 31, 2023, SVC also owned 752 service-focused retail net lease properties totaling approximately 13.3 million square feet throughout the United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of December 31, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA.

About Orion Office REIT

Orion Office REIT specializes in the ownership, acquisition and management of a diversified portfolio of mission-critical and corporate headquarters office buildings in high-quality suburban markets across the U.S. The portfolio is leased primarily on a single-tenant net lease basis to creditworthy tenants. The company's team of experienced industry leaders employs a proven, cycle-tested investment evaluation framework which serves as the lens through which capital allocation decisions are made for the current portfolio and future acquisitions.