Critical Analysis: VEREIT (NYSE:VER) and The Competition

VEREIT (NYSE: VER) is one of 88 public companies in the “Commercial REITs” industry, but how does it weigh in compared to its peers? We will compare VEREIT to related companies based on the strength of its analyst recommendations, earnings, dividends, institutional ownership, profitability, valuation and risk.

Analyst Ratings

This is a summary of recent ratings and price targets for VEREIT and its peers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
VEREIT 1 1 4 0 2.50
VEREIT Competitors 650 2546 2213 24 2.30

VEREIT currently has a consensus target price of $10.00, indicating a potential upside of 21.80%. As a group, “Commercial REITs” companies have a potential upside of 9.60%. Given VEREIT’s stronger consensus rating and higher possible upside, research analysts clearly believe VEREIT is more favorable than its peers.

Profitability

This table compares VEREIT and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
VEREIT -3.76% -0.61% -0.34%
VEREIT Competitors 50.96% 6.44% 3.70%

Institutional and Insider Ownership

85.0% of VEREIT shares are owned by institutional investors. Comparatively, 70.6% of shares of all “Commercial REITs” companies are owned by institutional investors. 0.1% of VEREIT shares are owned by insiders. Comparatively, 8.5% of shares of all “Commercial REITs” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares VEREIT and its peers revenue, earnings per share and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
VEREIT $1.45 billion -$195.86 million -82.09
VEREIT Competitors $543.34 million $104.77 million 454.19

VEREIT has higher revenue, but lower earnings than its peers. VEREIT is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Volatility and Risk

VEREIT has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500. Comparatively, VEREIT’s peers have a beta of 0.78, indicating that their average share price is 22% less volatile than the S&P 500.

Dividends

VEREIT pays an annual dividend of $0.55 per share and has a dividend yield of 6.7%. VEREIT pays out -549.9% of its earnings in the form of a dividend. As a group, “Commercial REITs” companies pay a dividend yield of 3.9% and pay out 162.3% of their earnings in the form of a dividend. VEREIT is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Summary

VEREIT peers beat VEREIT on 8 of the 15 factors compared.

About VEREIT

VEREIT, Inc. is a full-service real estate operating company. The Company operates through two business segments: real estate investment (REI) segment and investment management segment, Cole Capital. As of December 31, 2016, through its REI segment, the Company owned and managed a portfolio of 4,142 retail, restaurant, office and industrial real estate properties with an aggregate of 93.3 million square feet, which are located in 49 states, Puerto Rico and Canada. Through its Cole Capital segment, the Company is responsible for raising capital for and managing the affairs of certain non-listed real estate investment trusts (the Cole REITs) on a day-to-day basis, identifying and making acquisitions and investments on the Cole REITs’ behalf. The Cole Capital segment sponsors and manages direct investment real estate programs, which primarily include over four publicly registered, non-traded REITs.

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