Head-To-Head Analysis: Highwoods Properties (HIW) vs. Equity Commonwealth (EQC)

Highwoods Properties (NYSE: HIW) and Equity Commonwealth (NYSE:EQC) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, dividends and valuation.

Dividends

Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.4%. Equity Commonwealth does not pay a dividend. 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.

Volatility and Risk

Highwoods Properties has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, Equity Commonwealth has a beta of 0.13, meaning that its share price is 87% less volatile than the S&P 500.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Highwoods Properties $683.61 million 7.86 $366.80 million $1.24 41.95
Equity Commonwealth $409.33 million 9.32 $194.30 million $0.86 35.76

Highwoods Properties has higher revenue and earnings than Equity Commonwealth. Equity Commonwealth is trading at a lower price-to-earnings ratio than Highwoods Properties, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Highwoods Properties and Equity Commonwealth, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Highwoods Properties 0 2 2 0 2.50
Equity Commonwealth 0 2 0 0 2.00

Highwoods Properties currently has a consensus price target of $54.67, suggesting a potential upside of 5.09%. Equity Commonwealth has a consensus price target of $32.50, suggesting a potential upside of 5.69%. Given Equity Commonwealth’s higher probable upside, analysts clearly believe Equity Commonwealth is more favorable than Highwoods Properties.

Profitability

This table compares Highwoods Properties and Equity Commonwealth’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Highwoods Properties 18.79% 5.96% 2.82%
Equity Commonwealth 28.50% 3.69% 2.52%

Insider and Institutional Ownership

98.4% of Highwoods Properties shares are owned by institutional investors. Comparatively, 94.5% of Equity Commonwealth shares are owned by institutional investors. 1.9% of Highwoods Properties shares are owned by company insiders. Comparatively, 1.0% of Equity Commonwealth shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Highwoods Properties beats Equity Commonwealth on 11 of the 16 factors compared between the two stocks.

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.

Equity Commonwealth Company Profile

Equity Commonwealth is an internally managed and self-advised real estate investment trust. The Company is engaged in the ownership and operation primarily of office buildings across the United States. The Company conducts its activities primarily through EQC Operating Trust (the Operating Trust). As of August 14, 2017, the Company’s portfolio included 20 properties and 11 million square feet. As of December 31, 2016, its properties included Parkshore Plaza; 1225 Seventeenth Street; 1601 Dry Creek Drive; 97 Newberry Road; 33 Stiles Lane; 802 Delaware Avenue; 6600 North Military Trail; East Eisenhower Parkway; 2250 Pilot Knob Road; 411 Farwell Avenue; Cherrington Corporate Center; 1500 Market Street; Foster Plaza; 4515 Seton Center Parkway; Bridgepoint Square, and Research Park. As of December 31, 2016, the Company’s land parcels included 625 Crane Street and Cabot Business Park Land.

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