Reviewing Empire State Realty Trust (NYSE:ESRT) and Orion Office REIT (NYSE:ONL)

Empire State Realty Trust (NYSE:ESRT) and Orion Office REIT (NYSE:ONL) are both small-cap real estate companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, earnings, dividends and risk.

Dividends

Empire State Realty Trust pays an annual dividend of $0.14 per share and has a dividend yield of 3.1%. Orion Office REIT pays an annual dividend of $0.08 per share and has a dividend yield of 3.5%. Empire State Realty Trust pays out 200.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Orion Office REIT pays out -4.7% of its earnings in the form of a dividend. Orion Office REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Empire State Realty Trust and Orion Office REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Empire State Realty Trust	0.93%	0.40%	0.17%
Orion Office REIT	-65.66%	-14.85%	-7.95%

Analyst Recommendations

This is a summary of recent ratings and price targets for Empire State Realty Trust and Orion Office REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Empire State Realty Trust	2	1	0	0	1.33
Orion Office REIT	1	0	1	0	2.00

Empire State Realty Trust currently has a consensus price target of $5.00, indicating a potential upside of 12.16%. Orion Office REIT has a consensus price target of $3.50, indicating a potential upside of 53.85%. Given Orion Office REIT’s stronger consensus rating and higher possible upside, analysts clearly believe Orion Office REIT is more favorable than Empire State Realty Trust.

Institutional & Insider Ownership

67.1% of Empire State Realty Trust shares are held by institutional investors. Comparatively, 79.9% of Orion Office REIT shares are held by institutional investors. 15.2% of Empire State Realty Trust shares are held by company insiders. Comparatively, 1.6% of Orion Office REIT shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Empire State Realty Trust has a beta of 1.4, suggesting that its share price is 40% more volatile than the S&P 500. Comparatively, Orion Office REIT has a beta of 1.59, suggesting that its share price is 59% more volatile than the S&P 500.

Valuation & Earnings

This table compares Empire State Realty Trust and Orion Office REIT”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Empire State Realty Trust	$768.27 million	1.00	$47.60 million	$0.07	63.69
Orion Office REIT	$147.65 million	0.88	-$139.31 million	($1.69)	-1.35

Empire State Realty Trust has higher revenue and earnings than Orion Office REIT. Orion Office REIT 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.

Summary

Empire State Realty Trust beats Orion Office REIT on 9 of the 16 factors compared between the two stocks.

About Empire State Realty Trust

Empire State Realty Trust, Inc. (NYSE: ESRT) is a NYC-focused REIT that owns and operates a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets. The company is the recognized leader in energy efficiency and indoor environmental quality. ESRT’s flagship Empire State Building – the “World’s Most Famous Building” – includes its Observatory, Tripadvisor’s 2023 Travelers’ Choice Awards: Best of the Best the #1 attraction in the US for two consecutive years. As of September 30, 2023, ESRT’s portfolio is comprised of approximately 8.6 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 727 residential units across three multifamily properties.

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.