Government Properties Income Trust (GOV) and Empire State Realty Trust (ESRT) Critical Analysis

Government Properties Income Trust (NASDAQ: GOV) and Empire State Realty Trust (NYSE:ESRT) are both financials companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.

Valuation & Earnings

This table compares Government Properties Income Trust and Empire State Realty Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Government Properties Income Trust $258.18 million 5.92 $57.84 million $0.55 28.02
Empire State Realty Trust $678.00 million 4.14 $52.39 million $0.39 45.39

Government Properties Income Trust has higher earnings, but lower revenue than Empire State Realty Trust. Government Properties Income Trust is trading at a lower price-to-earnings ratio than Empire State Realty Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Government Properties Income Trust pays an annual dividend of $1.72 per share and has a dividend yield of 11.2%. Empire State Realty Trust pays an annual dividend of $0.42 per share and has a dividend yield of 2.4%. Government Properties Income Trust pays out 312.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Empire State Realty Trust pays out 107.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Government Properties Income Trust has raised its dividend for 2 consecutive years. Government Properties Income Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

59.4% of Government Properties Income Trust shares are held by institutional investors. Comparatively, 83.5% of Empire State Realty Trust shares are held by institutional investors. 2.7% of Government Properties Income Trust shares are held by company insiders. Comparatively, 11.8% of Empire State Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Government Properties Income Trust and Empire State Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Government Properties Income Trust 15.30% 4.27% 1.66%
Empire State Realty Trust 11.90% 3.98% 2.04%

Analyst Recommendations

This is a summary of recent recommendations for Government Properties Income Trust and Empire State Realty Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Government Properties Income Trust 2 1 2 0 2.00
Empire State Realty Trust 0 1 2 0 2.67

Government Properties Income Trust presently has a consensus target price of $18.75, suggesting a potential upside of 21.67%. Empire State Realty Trust has a consensus target price of $21.75, suggesting a potential upside of 22.88%. Given Empire State Realty Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Empire State Realty Trust is more favorable than Government Properties Income Trust.

Risk & Volatility

Government Properties Income Trust has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, Empire State Realty Trust has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

Government Properties Income Trust Company Profile

Government Properties Income Trust is a real estate investment trust (REIT). The Company operates through two segments: ownership of properties that are primarily leased to government tenants and its equity method investment in Select Income REIT (SIR). The Company’s properties are located in areas, including Alabama, Arizona, California, Colorado, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey and New Mexico. As of December 31, 2016, the Company owned 73 properties (95 buildings). As of December 31, 2016, the Company’s properties were located in 31 states and the District of Columbia, and contained approximately 11.4 million rentable square feet.

Empire State Realty Trust Company Profile

Empire State Realty Trust, Inc. is a real estate investment trust. The Company owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area, including the Empire State Building. The Company operates through two segments: Real Estate and Observatory. The Real Estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of its real estate assets. The Observatory segment operates the 86th and 102nd floor observatories at the Empire State Building. As of December 31, 2016, its portfolio consisted of 14 office properties and six standalone retail properties totaling approximately 10.1 million rentable square feet. The Company’s properties include One Grand Central Place, 1400 Broadway, 111 West 33rd Street, 250 West 57th Street, 1359 Broadway and 1333 Broadway.

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