Analyzing First Potomac Realty Trust (FPO) and Alexandria Real Estate Equities (ARE)

Alexandria Real Estate Equities (NYSE: ARE) and First Potomac Realty Trust (NYSE:FPO) are both financials companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, valuation, risk, institutional ownership and earnings.

Earnings & Valuation

This table compares Alexandria Real Estate Equities and First Potomac Realty Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alexandria Real Estate Equities $1.02 billion 10.84 $639.55 million $0.40 295.16
First Potomac Realty Trust $154.33 million 4.24 $83.35 million $0.69 16.15

Alexandria Real Estate Equities has higher revenue and earnings than First Potomac Realty Trust. First Potomac Realty Trust is trading at a lower price-to-earnings ratio than Alexandria Real Estate Equities, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations and price targets for Alexandria Real Estate Equities and First Potomac Realty Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alexandria Real Estate Equities 0 0 3 0 3.00
First Potomac Realty Trust 2 2 1 0 1.80

Alexandria Real Estate Equities currently has a consensus price target of $126.00, indicating a potential upside of 6.73%. First Potomac Realty Trust has a consensus price target of $11.03, indicating a potential downside of 0.99%. Given Alexandria Real Estate Equities’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Alexandria Real Estate Equities is more favorable than First Potomac Realty Trust.

Risk & Volatility

Alexandria Real Estate Equities has a beta of 0.87, indicating that its share price is 13% 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.

Profitability

This table compares Alexandria Real Estate Equities and First Potomac Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alexandria Real Estate Equities 15.20% 2.55% 1.51%
First Potomac Realty Trust 26.86% 8.96% 3.32%

Dividends

Alexandria Real Estate Equities pays an annual dividend of $3.44 per share and has a dividend yield of 2.9%. First Potomac Realty Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. Alexandria Real Estate Equities pays out 860.0% 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. Alexandria Real Estate Equities has raised its dividend for 6 consecutive years. First Potomac Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

93.1% of First Potomac Realty Trust shares are held by institutional investors. 1.6% of Alexandria Real Estate Equities 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, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Alexandria Real Estate Equities beats First Potomac Realty Trust on 9 of the 17 factors compared between the two stocks.

About Alexandria Real Estate Equities

Alexandria Real Estate Equities, Inc. is a real estate investment (REIT). The Company is engaged in the business of providing space for lease to the life science and technology industries. It focuses on collaborative life science and technology campuses. It develops urban cluster campuses and ecosystems. As of December 31, 2016, the Company had 199 properties in North America. As of December 31, 2016, its asset base in North America consisted of 25.2 million square feet, including 19.9 million rentable square feet/foot (RSF) of operating properties, and development and redevelopment of under construction or pre-construction, as well as 5.3 million square feet of future ground-up development projects. Its properties are located in various areas, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland and Research Triangle Park. Its properties include Alexandria Technology Square, Alexandria Park at 128 and Alexandria Technology Center-Gateway.

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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