Vornado Realty Trust (NYSE: VNO) and Alexandria Real Estate Equities (NYSE:ARE) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, institutional ownership, dividends, analyst recommendations, risk and earnings.
Institutional and Insider Ownership
86.0% of Vornado Realty Trust shares are owned by institutional investors. 9.7% of Vornado Realty Trust shares are owned by insiders. Comparatively, 1.6% of Alexandria Real Estate Equities shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This table compares Vornado Realty Trust and Alexandria Real Estate Equities’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Vornado Realty Trust||37.96%||4.51%||1.39%|
|Alexandria Real Estate Equities||9.45%||3.11%||1.49%|
Vornado Realty Trust pays an annual dividend of $2.40 per share and has a dividend yield of 3.1%. Alexandria Real Estate Equities pays an annual dividend of $3.44 per share and has a dividend yield of 2.9%. Vornado Realty Trust pays out 51.7% of its earnings in the form of a dividend. 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. Alexandria Real Estate Equities has raised its dividend for 6 consecutive years. Vornado Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of current ratings and target prices for Vornado Realty Trust and Alexandria Real Estate Equities, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Vornado Realty Trust||0||4||6||0||2.60|
|Alexandria Real Estate Equities||0||0||3||0||3.00|
Vornado Realty Trust presently has a consensus target price of $94.10, suggesting a potential upside of 22.40%. Alexandria Real Estate Equities has a consensus target price of $126.00, suggesting a potential upside of 5.91%. Given Vornado Realty Trust’s higher probable upside, equities research analysts clearly believe Vornado Realty Trust is more favorable than Alexandria Real Estate Equities.
Earnings and Valuation
This table compares Vornado Realty Trust and Alexandria Real Estate Equities’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Vornado Realty Trust||$2.70 billion||5.39||$1.40 billion||$4.64||16.57|
|Alexandria Real Estate Equities||$1.02 billion||10.92||$639.55 million||$0.40||297.43|
Vornado Realty Trust has higher revenue and earnings than Alexandria Real Estate Equities. Vornado 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.
Risk & Volatility
Vornado Realty Trust has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500. Comparatively, Alexandria Real Estate Equities has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.
Vornado Realty Trust beats Alexandria Real Estate Equities on 12 of the 17 factors compared between the two stocks.
About Vornado Realty Trust
Vornado Realty Trust is a real estate investment trust (REIT). The Company conducts its business through Vornado Realty L.P. (the Operating Partnership). The Company operates through two segments: New York and Washington, DC. As of December 31, 2016, the Company’s New York segment consisted of 28.3 million square feet in 86 properties. Its properties include 1290 Avenue of the Americas, Two Penn Plaza, 770 Broadway and 90 Park Avenue. As of December 31, 2016, the Company’s Washington, DC segment consisted of 58 properties aggregating 14.7 million square feet, including 11.1 million square feet of office space in 44 properties, nine residential properties containing 3,156 units and a hotel property. Its properties include 2001 Jefferson Davis Highway, 223 23rd Street, 2221 South Clark Street and 1700 M Street. The Company’s interests in properties are held by the Operating Partnership. As of December 31, 2016, the Company owned the 3.7 million square foot Mart (theMart) in Chicago.
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.
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