Empire State Realty Trust (ESRT) & Realty Income (O) Head-To-Head Analysis

Empire State Realty Trust (NYSE: ESRT) and Realty Income (NYSE:O) are both mid-cap commercial reits – nec companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Profitability

This table compares Empire State Realty Trust and Realty Income’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Empire State Realty Trust 11.90% 3.98% 2.04%
Realty Income 29.37% 5.11% 2.64%

Dividends

Empire State Realty Trust pays an annual dividend of $0.42 per share and has a dividend yield of 2.1%. Realty Income pays an annual dividend of $2.54 per share and has a dividend yield of 4.5%. Empire State Realty Trust pays out 123.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Realty Income pays out 208.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Realty Income has increased its dividend for 21 consecutive years. Realty Income is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

83.8% of Empire State Realty Trust shares are owned by institutional investors. Comparatively, 67.2% of Realty Income shares are owned by institutional investors. 11.8% of Empire State Realty Trust shares are owned by insiders. Comparatively, 0.3% of Realty Income shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Empire State Realty Trust has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500. Comparatively, Realty Income has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Empire State Realty Trust and Realty Income, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Empire State Realty Trust 0 3 1 0 2.25
Realty Income 1 5 3 0 2.22

Empire State Realty Trust presently has a consensus price target of $21.75, indicating a potential upside of 6.25%. Realty Income has a consensus price target of $69.25, indicating a potential upside of 23.07%. Given Realty Income’s higher possible upside, analysts clearly believe Realty Income is more favorable than Empire State Realty Trust.

Valuation and Earnings

This table compares Empire State Realty Trust and Realty Income’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Empire State Realty Trust $678.00 million 4.79 $52.39 million $0.34 60.21
Realty Income $1.10 billion 14.37 $315.57 million $1.22 46.12

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

Summary

Realty Income beats Empire State Realty Trust on 11 of the 17 factors compared between the two stocks.

Empire State Realty Trust Company Profile

Empire State Realty Trust, Inc. is a real estate investment trust. The Company owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area, including the Empire State Building. The Company operates through two segments: Real Estate and Observatory. The Real Estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of its real estate assets. The Observatory segment operates the 86th and 102nd floor observatories at the Empire State Building. As of December 31, 2016, its portfolio consisted of 14 office properties and six standalone retail properties totaling approximately 10.1 million rentable square feet. The Company’s properties include One Grand Central Place, 1400 Broadway, 111 West 33rd Street, 250 West 57th Street, 1359 Broadway and 1333 Broadway.

Realty Income Company Profile

Realty Income Corporation is a real estate investment trust (REIT). The Company is engaged in in-house acquisition, portfolio management, asset management, credit research, real estate research, legal, finance and accounting, information technology and capital markets capabilities. As of December 31, 2016, the Company owned a diversified portfolio of 4,944 properties located in 49 states and Puerto Rico, with over 83.0 million square feet of leasable space leased to 248 different commercial tenants doing business in 47 separate industries. As of December 31, 2016, of the 4,944 properties in the portfolio, 4,920, or 99.5%, were single-tenant properties, and the remaining were multi-tenant properties. As of December 31, 2016, of the 4,920 single-tenant properties, 4,836 were leased with a weighted average remaining lease term (excluding rights to extend a lease at the option of the tenant) of approximately 9.8 years.

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