Critical Contrast: Spirit Realty Capital (SRC) and W.P. Carey (NYSE:WPC)

Spirit Realty Capital (NYSE: SRC) and W.P. Carey (NYSE:WPC) are both mid-cap 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, profitabiliy, valuation, earnings and risk.

Earnings & Valuation

This table compares Spirit Realty Capital and W.P. Carey’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Spirit Realty Capital $667.15 million 6.12 $586.47 million $0.14 60.21
W.P. Carey $884.11 million 8.01 $715.85 million $2.59 25.66

W.P. Carey has higher revenue and earnings than Spirit Realty Capital. W.P. Carey is trading at a lower price-to-earnings ratio than Spirit Realty Capital, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

93.8% of Spirit Realty Capital shares are held by institutional investors. Comparatively, 49.4% of W.P. Carey shares are held by institutional investors. 0.5% of Spirit Realty Capital shares are held by company insiders. Comparatively, 1.3% of W.P. Carey 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.

Profitability

This table compares Spirit Realty Capital and W.P. Carey’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Spirit Realty Capital 9.47% 1.74% 0.82%
W.P. Carey 34.97% 8.10% 3.35%

Dividends

Spirit Realty Capital pays an annual dividend of $0.72 per share and has a dividend yield of 8.5%. W.P. Carey pays an annual dividend of $4.00 per share and has a dividend yield of 6.0%. Spirit Realty Capital pays out 514.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. W.P. Carey pays out 154.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Spirit Realty Capital has raised its dividend for 16 consecutive years and W.P. Carey has raised its dividend for 2 consecutive years. Spirit Realty Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Spirit Realty Capital has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500. Comparatively, W.P. Carey has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Spirit Realty Capital and W.P. Carey, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Spirit Realty Capital 2 7 5 0 2.21
W.P. Carey 1 2 1 0 2.00

Spirit Realty Capital currently has a consensus price target of $11.22, suggesting a potential upside of 33.07%. W.P. Carey has a consensus price target of $67.67, suggesting a potential upside of 1.82%. Given Spirit Realty Capital’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Spirit Realty Capital is more favorable than W.P. Carey.

Summary

W.P. Carey beats Spirit Realty Capital on 10 of the 17 factors compared between the two stocks.

About Spirit Realty Capital

Spirit Realty Capital, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company’s operations are carried out through Spirit Realty, L.P. (the Operating Partnership). The Company invests in single-tenant, operationally essential real estate throughout the United States that is leased on a long-term, triple-net basis primarily to tenants engaged in retail, service and distribution industries. Single-tenant, operationally essential real estate consists of properties that are generally free-standing, commercial real estate facilities where its tenants conduct retail, service or distribution activities. as of December 31, 2012, the Company’s portfolio of 1,122 owned properties were leased to approximately 165 tenants.

About W.P. Carey

W. P. Carey provides long-term, sale-leaseback and build-to-suit transactions for companies worldwide, and manages a global investment portfolio. It has two primary business segments. Under the investment management segment, the Company earns revenue as the advisor to publicly owned, non-actively traded real estate investment trusts (REITs), which are sponsored by the Company under the Corporate Property Associates brand name (the CPA REITs) and invests in similar properties. Under the real estate ownership segment, the Company owns and invests in commercial properties in the United States and the European Union that are then leased to companies, primarily on a single-tenant, triple-net leased basis. As of December 31, 2009, it operated as advisor to Corporate Property Associates 14 Incorporated, Corporate Property Associates 15 Incorporated, Corporate Property Associates 16 – Global Incorporated and Corporate Property Associates 17 – Global Incorporated.

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