Hudson Pacific Properties (NYSE: HPP) and Highwoods Properties (NYSE:HIW) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, institutional ownership, valuation, analyst recommendations and risk.
Earnings and Valuation
This table compares Hudson Pacific Properties and Highwoods Properties’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Hudson Pacific Properties||$680.57 million||7.72||$289.13 million||$0.36||93.94|
|Highwoods Properties||$683.61 million||7.71||$366.80 million||$1.47||34.73|
Highwoods Properties has higher revenue and earnings than Hudson Pacific Properties. Highwoods Properties is trading at a lower price-to-earnings ratio than Hudson Pacific Properties, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and recommmendations for Hudson Pacific Properties and Highwoods Properties, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Hudson Pacific Properties||0||2||5||0||2.71|
Hudson Pacific Properties currently has a consensus target price of $37.79, suggesting a potential upside of 11.73%. Highwoods Properties has a consensus target price of $54.80, suggesting a potential upside of 7.35%. Given Hudson Pacific Properties’ stronger consensus rating and higher probable upside, analysts clearly believe Hudson Pacific Properties is more favorable than Highwoods Properties.
This table compares Hudson Pacific Properties and Highwoods Properties’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Hudson Pacific Properties||7.87%||1.37%||0.79%|
Institutional and Insider Ownership
97.8% of Highwoods Properties shares are owned by institutional investors. 0.3% of Hudson Pacific Properties shares are owned by company insiders. Comparatively, 1.9% of Highwoods Properties shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Hudson Pacific Properties pays an annual dividend of $1.00 per share and has a dividend yield of 3.0%. Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.4%. Hudson Pacific Properties pays out 277.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties pays out 119.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Hudson Pacific Properties has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.
Highwoods Properties beats Hudson Pacific Properties on 11 of the 16 factors compared between the two stocks.
About Hudson Pacific Properties
Hudson Pacific Properties, Inc. is a real estate investment trust (REIT). The Company operates in two segments: office properties, and media and entertainment properties. The Company is focused on acquiring, repositioning, developing and operating office and media and entertainment properties in submarkets throughout Northern and Southern California and the Pacific Northwest. As of December 31, 2016, the Company’s portfolio included office properties consisting of an aggregate of approximately 14.1 million square feet, and media and entertainment properties consisting of approximately 0.9 million square feet of sound-stage, office and supporting production facilities. As of December 31, 2016, the Company also owned undeveloped density rights for approximately 2.5 million square feet of future office and residential space. The Company’s in-service office properties include stabilized office properties and lease-up office properties.
About Highwoods Properties
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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