Comparing Inland Real Estate (IRC) and Select Income REIT (NASDAQ:SIR)

Select Income REIT (NASDAQ: SIR) and Inland Real Estate (NYSE:IRC) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, valuation, dividends, institutional ownership and earnings.

Profitability

This table compares Select Income REIT and Inland Real Estate’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Select Income REIT 19.15% 4.36% 1.91%
Inland Real Estate -0.49% -2.46% -0.06%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Select Income REIT and Inland Real Estate, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Select Income REIT 1 1 3 0 2.40
Inland Real Estate 0 0 0 0 N/A

Select Income REIT currently has a consensus target price of $23.50, indicating a potential upside of 16.86%. Given Select Income REIT’s higher possible upside, equities research analysts clearly believe Select Income REIT is more favorable than Inland Real Estate.

Insider and Institutional Ownership

47.8% of Select Income REIT shares are held by institutional investors. 2.0% of Select Income REIT shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Select Income REIT and Inland Real Estate’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Select Income REIT $462.01 million 3.90 $116.32 million $1.00 20.11
Inland Real Estate N/A N/A N/A $0.10 106.10

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

Dividends

Select Income REIT pays an annual dividend of $2.04 per share and has a dividend yield of 10.1%. Inland Real Estate pays an annual dividend of $0.57 per share and has a dividend yield of 5.4%. Select Income REIT pays out 204.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Inland Real Estate pays out 570.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Select Income REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Select Income REIT beats Inland Real Estate on 11 of the 12 factors compared between the two stocks.

Select Income REIT Company Profile

Select Income REIT is a real estate investment trust. The Company is engaged in the ownership of properties that include buildings and leased industrial lands that are primarily net leased to single tenants. As of December 31, 2016, the Company owned 121 properties (362 buildings, leasable land parcels and easements) with approximately 44.8 million rentable square feet. As of December 31, 2016, the Company’s properties consisted of 110 office and industrial properties (133 buildings) with approximately 27.0 million square feet located in 34 states throughout the mainland United States (Mainland Properties), and 11 properties (229 buildings, leasable land parcels and easements) located on the island of Oahu, Hawaii, with approximately 17.8 million rentable square feet that are primarily leased to industrial and commercial tenants (Hawaii Properties). As of December 31, 2016, the Company’s properties were leased to 312 different tenants.

Inland Real Estate Company Profile

IRC Retail Centers, Inc., formerly Inland Real Estate Corporation, is a real estate investment trust (REIT). The Company owns, operates and develops open-air neighborhood, community and power shopping centers and single tenant retail properties located throughout the Central and Southeastern United States. Through its subsidiaries, Inland Commercial Property Management, Inc. (ICPM) and Inland TRS Property Management, Inc., the Company manages all properties it owns interests in and properties for certain third parties and related parties. The Company owns investment properties located in the States of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Minnesota, Missouri, Nebraska, New York, North Carolina, Ohio, Oklahoma, South Carolina, Texas, Virginia and Wisconsin. The Company owns interests in approximately 130 investment properties, including those owned through its unconsolidated joint ventures.

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