Vornado Realty Trust (NYSE: VNO) and First Potomac Realty Trust (NYSE:FPO) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.
Risk and Volatility
Vornado Realty Trust has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500. Comparatively, First Potomac Realty Trust has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500.
This is a breakdown of current ratings and target prices for Vornado Realty Trust and First Potomac Realty Trust, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Vornado Realty Trust||0||3||6||0||2.67|
|First Potomac Realty Trust||2||1||1||0||1.75|
Vornado Realty Trust currently has a consensus price target of $89.89, suggesting a potential upside of 17.62%. First Potomac Realty Trust has a consensus price target of $11.29, suggesting a potential upside of 1.32%. Given Vornado Realty Trust’s stronger consensus rating and higher probable upside, research analysts clearly believe Vornado Realty Trust is more favorable than First Potomac Realty Trust.
Insider and Institutional Ownership
86.2% of Vornado Realty Trust shares are owned by institutional investors. Comparatively, 93.1% of First Potomac Realty Trust shares are owned by institutional investors. 9.8% of Vornado Realty Trust shares are owned by company insiders. Comparatively, 2.1% of First Potomac Realty Trust 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.
This table compares Vornado Realty Trust and First Potomac Realty Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Vornado Realty Trust||35.23%||4.73%||1.43%|
|First Potomac Realty Trust||-7.99%||-2.35%||-0.94%|
Earnings & Valuation
This table compares Vornado Realty Trust and First Potomac Realty Trust’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Vornado Realty Trust||$2.51 billion||5.79||$906.91 million||$4.14||18.46|
|First Potomac Realty Trust||N/A||N/A||N/A||$0.69||16.14|
Vornado Realty Trust has higher revenue and earnings than First Potomac Realty Trust. First Potomac Realty Trust is trading at a lower price-to-earnings ratio than Vornado Realty Trust, indicating that it is currently the more affordable of the two stocks.
Vornado Realty Trust pays an annual dividend of $2.40 per share and has a dividend yield of 3.1%. First Potomac Realty Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. Vornado Realty Trust pays out 58.0% of its earnings in the form of a dividend. First Potomac Realty Trust pays out 58.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Vornado Realty Trust beats First Potomac Realty Trust on 11 of the 13 factors compared between the two stocks.
About Vornado Realty Trust
Vornado Realty Trust is a real estate investment trust (REIT). The Company conducts its business through Vornado Realty L.P. (the Operating Partnership). The Company operates through two segments: New York and Washington, DC. As of December 31, 2016, the Company’s New York segment consisted of 28.3 million square feet in 86 properties. Its properties include 1290 Avenue of the Americas, Two Penn Plaza, 770 Broadway and 90 Park Avenue. As of December 31, 2016, the Company’s Washington, DC segment consisted of 58 properties aggregating 14.7 million square feet, including 11.1 million square feet of office space in 44 properties, nine residential properties containing 3,156 units and a hotel property. Its properties include 2001 Jefferson Davis Highway, 223 23rd Street, 2221 South Clark Street and 1700 M Street. The Company’s interests in properties are held by the Operating Partnership. As of December 31, 2016, the Company owned the 3.7 million square foot Mart (theMart) in Chicago.
About First Potomac Realty Trust
First Potomac Realty Trust (First Potomac) is engaged in ownership, management, redevelopment and development of office and business park properties in the greater Washington, D.C. region. The Company’s segments include Washington, D.C., Maryland, Northern Virginia and Southern Virginia. The Company conducts its business through First Potomac Realty Investment Limited Partnership, its operating partnership. The Company’s portfolio consist a mix of single-tenant and multi-tenant office properties, and business parks. The office properties are single-story and multi-story buildings that are primarily for office uses, and business parks consists of buildings with office features combined with some industrial property space. As of December 31, 2016, the Company owned properties totaling 6.7 million square feet and had a non-controlling ownership interest in properties totaling an additional 0.9 million square feet through five unconsolidated joint ventures.
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