Empire State Realty Trust (NYSE: ESRT) and First Potomac Realty Trust (NYSE:FPO) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, earnings, valuation, institutional ownership, profitability, risk and analyst recommendations.

Volatility & Risk

Empire State Realty Trust has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500. Comparatively, First Potomac Realty Trust has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Institutional and Insider Ownership

83.5% of Empire State Realty Trust shares are held by institutional investors. Comparatively, 93.2% of First Potomac Realty Trust shares are held by institutional investors. 11.8% of Empire State Realty Trust shares are held by insiders. Comparatively, 2.1% of First Potomac Realty 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.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Empire State Realty Trust and First Potomac Realty Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Empire State Realty Trust 0 3 1 0 2.25
First Potomac Realty Trust 2 2 1 0 1.80

Empire State Realty Trust currently has a consensus price target of $21.75, indicating a potential upside of 6.67%. First Potomac Realty Trust has a consensus price target of $11.03, indicating a potential downside of 0.72%. Given Empire State Realty Trust’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Empire State Realty Trust is more favorable than First Potomac Realty Trust.

Earnings and Valuation

This table compares Empire State Realty Trust and First Potomac Realty Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Empire State Realty Trust $691.49 million 4.68 $329.91 million $0.39 52.28
First Potomac Realty Trust $154.33 million 4.23 $83.35 million $0.69 16.10

Empire State 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 Empire State Realty Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Empire State Realty Trust pays an annual dividend of $0.42 per share and has a dividend yield of 2.1%. First Potomac Realty Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. 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. First Potomac Realty Trust pays out 58.0% of its earnings in the form of a dividend. First Potomac Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Empire State 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
Empire State Realty Trust 11.67% 3.85% 1.96%
First Potomac Realty Trust 26.86% 8.96% 3.32%

Summary

Empire State Realty Trust beats First Potomac Realty Trust on 8 of the 15 factors compared between the two stocks.

About Empire State Realty Trust

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.

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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