Financial Analysis: Orion Office REIT (NYSE:ONL) and SL Green Realty (NYSE:SLG)

SL Green Realty (NYSE:SLG) and Orion Office REIT (NYSE:ONL) are both real estate companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Volatility & Risk

SL Green Realty has a beta of 1.58, suggesting that its share price is 58% more volatile than the S&P 500. Comparatively, Orion Office REIT has a beta of 1.57, suggesting that its share price is 57% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for SL Green Realty and Orion Office REIT, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SL Green Realty	2	10	7	0	2.26
Orion Office REIT	1	0	1	0	2.00

SL Green Realty presently has a consensus target price of $55.15, suggesting a potential downside of 4.17%. Orion Office REIT has a consensus target price of $3.50, suggesting a potential upside of 22.81%. Given Orion Office REIT’s higher probable upside, analysts plainly believe Orion Office REIT is more favorable than SL Green Realty.

Profitability

This table compares SL Green Realty and Orion Office REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SL Green Realty	-16.92%	-4.37%	-1.53%
Orion Office REIT	-65.66%	-14.85%	-7.95%

Earnings and Valuation

This table compares SL Green Realty and Orion Office REIT”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SL Green Realty	$983.27 million	4.16	-$88.28 million	($2.73)	-21.08
Orion Office REIT	$147.65 million	1.10	-$139.31 million	($1.69)	-1.69

SL Green Realty has higher revenue and earnings than Orion Office REIT. SL Green Realty is trading at a lower price-to-earnings ratio than Orion Office REIT, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

90.0% of SL Green Realty shares are owned by institutional investors. Comparatively, 79.9% of Orion Office REIT shares are owned by institutional investors. 5.9% of SL Green Realty shares are owned by insiders. Comparatively, 1.6% of Orion Office REIT shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

SL Green Realty pays an annual dividend of $2.47 per share and has a dividend yield of 4.3%. Orion Office REIT pays an annual dividend of $0.08 per share and has a dividend yield of 2.8%. SL Green Realty pays out -90.5% of its earnings in the form of a dividend. Orion Office REIT pays out -4.7% 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. SL Green Realty has increased its dividend for 1 consecutive years. SL Green Realty is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

SL Green Realty beats Orion Office REIT on 14 of the 17 factors compared between the two stocks.

About SL Green Realty

3SL Green Realty Corp., Manhattan’s largest office landlord, is a fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of June 30, 2022, SL Green held interests in 64 buildings totaling 34.4 million square feet. This included ownership interests in 26.3 million square feet of Manhattan buildings and 7.2 million square feet securing debt and preferred equity investments.

About Orion Office REIT

Orion Office REIT specializes in the ownership, acquisition and management of a diversified portfolio of mission-critical and corporate headquarters office buildings in high-quality suburban markets across the U.S. The portfolio is leased primarily on a single-tenant net lease basis to creditworthy tenants. The company's team of experienced industry leaders employs a proven, cycle-tested investment evaluation framework which serves as the lens through which capital allocation decisions are made for the current portfolio and future acquisitions.