Washington Real Estate Investment Trust (WRE) vs. Realty Income (O) Financial Analysis

Washington Real Estate Investment Trust (NYSE: WRE) and Realty Income (NYSE:O) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, profitability, valuation, earnings and risk.

Insider and Institutional Ownership

85.5% of Washington Real Estate Investment Trust shares are held by institutional investors. Comparatively, 70.3% of Realty Income shares are held by institutional investors. 0.6% of Washington Real Estate Investment Trust shares are held by company insiders. Comparatively, 0.3% of Realty Income shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Washington Real Estate Investment Trust pays an annual dividend of $1.20 per share and has a dividend yield of 4.5%. Realty Income pays an annual dividend of $2.63 per share and has a dividend yield of 5.2%. Washington Real Estate Investment Trust pays out 400.0% 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 215.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Washington Real Estate Investment Trust has raised its dividend for 22 consecutive years. Realty Income is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Washington Real Estate Investment Trust has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500. Comparatively, Realty Income has a beta of 0.14, indicating that its share price is 86% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Washington Real Estate Investment Trust and Realty Income, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Washington Real Estate Investment Trust 1 1 2 0 2.25
Realty Income 0 6 3 0 2.33

Washington Real Estate Investment Trust currently has a consensus price target of $30.33, suggesting a potential upside of 13.48%. Realty Income has a consensus price target of $66.60, suggesting a potential upside of 32.93%. Given Realty Income’s stronger consensus rating and higher probable upside, analysts clearly believe Realty Income is more favorable than Washington Real Estate Investment Trust.

Profitability

This table compares Washington Real Estate Investment Trust and Realty Income’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Washington Real Estate Investment Trust 7.10% 2.10% 0.98%
Realty Income 29.37% 5.11% 2.64%

Earnings & Valuation

This table compares Washington Real Estate Investment Trust and Realty Income’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Washington Real Estate Investment Trust $313.26 million 6.69 $119.33 million $0.30 89.10
Realty Income $1.10 billion 12.80 $315.57 million $1.22 41.07

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

Summary

Realty Income beats Washington Real Estate Investment Trust on 12 of the 17 factors compared between the two stocks.

About Washington Real Estate Investment Trust

Washington Real Estate Investment Trust is a self-administered equity real estate investment trust. The Company’s business consists of the ownership and operation of real property in the greater Washington metro region. The Company owns a diversified portfolio of office buildings, multifamily buildings and retail centers. The Company’s segments include office, multifamily and retail. The Company’s office properties provide office space for various types of businesses and professions. The Company’s multifamily properties provide rental housing for individuals and families throughout the Washington metro region. Its retail properties are typically grocery store anchored neighborhood centers that include other small shop tenants or regional power centers with various junior box tenants. As of April 4, 2017, it owned a diversified portfolio of 50 properties, totaling approximately 6.0 million square feet of commercial space and 4,480 residential units, and land held for development.

About Realty Income

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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