Piedmont Office Realty Trust (PDM) versus Highwoods Properties (HIW) Head-To-Head Review

Piedmont Office Realty Trust (NYSE: PDM) and Highwoods Properties (NYSE:HIW) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, analyst recommendations, earnings and profitability.

Analyst Ratings

This is a summary of recent ratings for Piedmont Office Realty Trust and Highwoods Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Piedmont Office Realty Trust 0 1 1 0 2.50
Highwoods Properties 0 2 2 0 2.50

Piedmont Office Realty Trust currently has a consensus target price of $22.25, suggesting a potential upside of 9.28%. Highwoods Properties has a consensus target price of $54.67, suggesting a potential upside of 5.09%. Given Piedmont Office Realty Trust’s higher possible upside, analysts plainly believe Piedmont Office Realty Trust is more favorable than Highwoods Properties.

Earnings and Valuation

This table compares Piedmont Office Realty Trust and Highwoods Properties’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Piedmont Office Realty Trust $579.79 million 5.11 $263.29 million $0.38 53.58
Highwoods Properties $683.61 million 7.86 $366.80 million $1.24 41.95

Highwoods Properties has higher revenue and earnings than Piedmont Office Realty Trust. Highwoods Properties is trading at a lower price-to-earnings ratio than Piedmont Office Realty Trust, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

82.8% of Piedmont Office Realty Trust shares are owned by institutional investors. Comparatively, 98.4% of Highwoods Properties shares are owned by institutional investors. 0.8% of Piedmont Office Realty Trust shares are owned by company insiders. Comparatively, 1.9% of Highwoods Properties shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Piedmont Office Realty Trust and Highwoods Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Piedmont Office Realty Trust 9.71% 2.67% 1.29%
Highwoods Properties 18.79% 5.96% 2.82%

Risk and Volatility

Piedmont Office Realty Trust has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Dividends

Piedmont Office Realty Trust pays an annual dividend of $0.84 per share and has a dividend yield of 4.1%. Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.4%. Piedmont Office Realty Trust pays out 221.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties pays out 141.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Piedmont Office Realty Trust has raised its dividend for 3 consecutive years. Piedmont Office Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Highwoods Properties beats Piedmont Office Realty Trust on 12 of the 16 factors compared between the two stocks.

About Piedmont Office Realty Trust

Piedmont Office Realty Trust, Inc. is an integrated self-managed real estate investment trust (REIT). The Company’s business consists primarily of owning, managing, operating, leasing, acquiring, developing, investing in, and disposing of office real estate assets. As of December 31, 2016, the Company owned and operated 65 in-service office properties, one redevelopment asset, two development assets and one office building through an unconsolidated joint venture. Its properties are located in areas, including New York, Chicago, Atlanta, Dallas, Boston, Minneapolis and Orlando. Its tenant base includes industries, such as business services, depository institutions, educational services, real estate, legal services and insurance carriers. The Company conducts business primarily through Piedmont Operating Partnership, L.P. (Piedmont OP). It performs the management of its buildings through its subsidiaries, including Piedmont Government Services, LLC and Piedmont Office Management, LLC.

About Highwoods Properties

Highwoods Properties, Inc. is an office real estate investment trust (REIT). The Company’s primary business is the operation, acquisition and development of office properties. The Company’s segments include Office and Other. The Company owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Greensboro, Memphis, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa. The Company conducts its activities through Highwoods Realty Limited Partnership (the Operating Partnership). The Company offers a range of real estate services to its customers. The Company offers services, including asset management, construction management, design and space planning, and renovation and re-positioning. The Company provides its customers with services, such as build-to-suit construction and space modification, including tenant improvements and expansions.

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