Federal Realty Investment Trust (FRT) vs. Digital Realty Trust (DLR) Critical Contrast

Digital Realty Trust (NYSE: DLR) and Federal Realty Investment Trust (NYSE:FRT) are both mid-cap financials companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, profitability, institutional ownership, analyst recommendations, valuation, dividends and risk.

Valuation and Earnings

This table compares Digital Realty Trust and Federal Realty Investment Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Digital Realty Trust $2.14 billion 10.14 $426.18 million $1.23 86.00
Federal Realty Investment Trust $801.59 million 11.12 $249.91 million $4.10 29.95

Digital Realty Trust has higher revenue and earnings than Federal Realty Investment Trust. Federal Realty Investment Trust is trading at a lower price-to-earnings ratio than Digital Realty Trust, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Digital Realty Trust has a beta of -0.09, suggesting that its stock price is 109% less volatile than the S&P 500. Comparatively, Federal Realty Investment Trust has a beta of 0.34, suggesting that its stock price is 66% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Digital Realty Trust and Federal Realty Investment Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digital Realty Trust 0 6 8 0 2.57
Federal Realty Investment Trust 1 2 8 0 2.64

Digital Realty Trust currently has a consensus price target of $124.85, suggesting a potential upside of 18.02%. Federal Realty Investment Trust has a consensus price target of $140.50, suggesting a potential upside of 14.40%. Given Digital Realty Trust’s higher possible upside, equities analysts plainly believe Digital Realty Trust is more favorable than Federal Realty Investment Trust.

Profitability

This table compares Digital Realty Trust and Federal Realty Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Digital Realty Trust 11.71% 5.15% 1.97%
Federal Realty Investment Trust 35.50% 13.28% 4.82%

Dividends

Digital Realty Trust pays an annual dividend of $3.72 per share and has a dividend yield of 3.5%. Federal Realty Investment Trust pays an annual dividend of $4.00 per share and has a dividend yield of 3.3%. Digital Realty Trust pays out 302.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federal Realty Investment Trust pays out 97.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Digital Realty Trust has increased its dividend for 50 consecutive years and Federal Realty Investment Trust has increased its dividend for 13 consecutive years. Digital Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

98.3% of Digital Realty Trust shares are held by institutional investors. Comparatively, 94.4% of Federal Realty Investment Trust shares are held by institutional investors. 0.4% of Digital Realty Trust shares are held by insiders. Comparatively, 1.1% of Federal Realty Investment Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Federal Realty Investment Trust beats Digital Realty Trust on 9 of the 16 factors compared between the two stocks.

Digital Realty Trust Company Profile

Digital Realty Trust, Inc. is a real estate investment trust (REIT). The Company is engaged in the business of owning, acquiring, developing and operating data centers. The Company is focused on providing data center and colocation solutions for domestic and international tenants across a range of industry verticals ranging from financial services, cloud and information technology services, to manufacturing, energy, healthcare and consumer products. As of December 31, 2016, its portfolio consisted of 145 operating properties, including 14 properties held as investments in unconsolidated joint ventures, of which 104 are located throughout the United States, 32 are located in Europe, four are located in Asia, three are located in Australia and two are located in Canada. It is a general partner of Digital Realty Trust, L.P. As of December 31, 2016, it owned an approximate 98.5% common general partnership interest in Digital Realty Trust, L.P.

Federal Realty Investment Trust Company Profile

Federal Realty Investment Trust is an equity real estate investment trust (REIT). The Company specializes in the ownership, management and redevelopment of retail and mixed-use properties located primarily in affluent communities in selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, as well as in California and South Florida. As of December 31, 2016, the Company owned or had an interest in community and neighborhood shopping centers and mixed-use properties, which operated as 96 retail real estate projects and included approximately 22.6 million square feet. As of December 31, 2016, its 96 retail shopping center and mixed-use properties were located in 12 states and the District of Columbia. As of December 31, 2016, there were approximately 2,900 leases with tenants providing a range of retail products and services. These tenants range from sole proprietorships to national retailers, or corporate group of tenants.

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