Critical Comparison: Parkway Properties (PKY) and Highwoods Properties (HIW)

Parkway Properties (NYSE: PKY) and Highwoods Properties (NYSE:HIW) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, dividends, earnings, analyst recommendations, valuation and risk.

Dividends

Parkway Properties pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.4%. Highwoods Properties pays out 141.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of recent recommendations for Parkway Properties and Highwoods Properties, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Parkway Properties 0 4 1 0 2.20
Highwoods Properties 0 2 2 0 2.50

Parkway Properties presently has a consensus target price of $21.60, indicating a potential downside of 5.92%. Highwoods Properties has a consensus target price of $54.67, indicating a potential upside of 5.49%. Given Highwoods Properties’ stronger consensus rating and higher possible upside, analysts clearly believe Highwoods Properties is more favorable than Parkway Properties.

Risk & Volatility

Parkway Properties has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500.

Insider & Institutional Ownership

97.3% of Parkway Properties shares are held by institutional investors. Comparatively, 98.4% of Highwoods Properties shares are held by institutional investors. 4.9% of Parkway Properties shares are held by insiders. Comparatively, 1.9% of Highwoods Properties shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Parkway Properties and Highwoods Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Parkway Properties N/A -4.40% -2.55%
Highwoods Properties 18.79% 5.96% 2.82%

Valuation & Earnings

This table compares Parkway Properties and Highwoods Properties’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Parkway Properties $182.22 million 6.31 $54.29 million N/A N/A
Highwoods Properties $683.61 million 7.83 $366.80 million $1.24 41.79

Highwoods Properties has higher revenue and earnings than Parkway Properties.

Summary

Highwoods Properties beats Parkway Properties on 11 of the 14 factors compared between the two stocks.

Parkway Properties Company Profile

Parkway, Inc. is a self-managed real estate investment trust (REIT). The Company owns and operates office properties located in submarkets in Houston, Texas. As of December 31, 2016, the Company’s portfolio consisted of five Class A assets comprising 19 buildings and totaling approximately 8.7 million rentable square feet in the Greenway, Galleria and Westchase submarkets of Houston. In addition, the Company operates a fee-based real estate service (the Third-Party Services Business) through a subsidiary, Eola Office Partners, LLC and its subsidiaries (collectively, Eola), which in total managed approximately 3.8 million square feet (unaudited) for primarily third-party owners, as of December 31, 2016. The Company’s properties include CityWestPlace, San Felipe Plaza, Phoenix Tower, Greenway Plaza and Post Oak Central.

Highwoods Properties Company Profile

Highwoods Properties, Inc. is an office real estate investment trust (REIT). The Company’s primary business is the operation, acquisition and development of office properties. The Company’s segments include Office and Other. The Company owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Greensboro, Memphis, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa. The Company conducts its activities through Highwoods Realty Limited Partnership (the Operating Partnership). The Company offers a range of real estate services to its customers. The Company offers services, including asset management, construction management, design and space planning, and renovation and re-positioning. The Company provides its customers with services, such as build-to-suit construction and space modification, including tenant improvements and expansions.

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