Financial Analysis: Equity One (EQY) vs. Washington Real Estate Investment Trust (WRE)

Equity One (NYSE: EQY) and Washington Real Estate Investment Trust (NYSE:WRE) are both mid-cap commercial reits – nec companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, risk, valuation and analyst recommendations.

Profitability

This table compares Equity One and Washington Real Estate Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Equity One 18.64% 3.82% 2.05%
Washington Real Estate Investment Trust 7.10% 2.10% 0.98%

Insider & Institutional Ownership

64.0% of Equity One shares are held by institutional investors. Comparatively, 85.4% of Washington Real Estate Investment Trust shares are held by institutional investors. 35.9% of Equity One shares are held by insiders. Comparatively, 0.6% of Washington Real Estate Investment Trust shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Equity One and Washington Real Estate Investment Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Equity One 0 0 0 0 N/A
Washington Real Estate Investment Trust 0 2 3 0 2.60

Washington Real Estate Investment Trust has a consensus target price of $33.88, indicating a potential upside of 8.85%. Given Washington Real Estate Investment Trust’s higher probable upside, analysts clearly believe Washington Real Estate Investment Trust is more favorable than Equity One.

Dividends

Equity One pays an annual dividend of $0.72 per share and has a dividend yield of 2.3%. Washington Real Estate Investment Trust pays an annual dividend of $1.20 per share and has a dividend yield of 3.9%. Equity One pays out 146.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Washington Real Estate Investment Trust pays out 400.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares Equity One and Washington Real Estate Investment Trust’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Equity One N/A N/A N/A $0.49 62.96
Washington Real Estate Investment Trust $313.26 million 7.79 $119.33 million $0.30 103.73

Washington Real Estate Investment Trust has higher revenue and earnings than Equity One. Equity One is trading at a lower price-to-earnings ratio than Washington Real Estate Investment Trust, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Equity One has a beta of 0.75, meaning that its stock price is 25% less volatile than the S&P 500. Comparatively, Washington Real Estate Investment Trust has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500.

Summary

Washington Real Estate Investment Trust beats Equity One on 7 of the 13 factors compared between the two stocks.

About Equity One

Equity One, Inc. is a real estate investment trust (REIT). The Company owns, manages, acquires, develops and redevelops shopping centers and retail properties located in supply constrained suburban and urban communities. As of December 31, 2016, the Company’s portfolio consisted of 122 properties, including 101 retail properties and five non-retail properties totaling approximately 12.8 million square feet of gross leasable area (GLA), 10 development or redevelopment properties with approximately 2.3 million square feet of GLA, and six land parcels. Its retail occupancy excluding developments and redevelopments was 95.8% and included national, regional and local tenants as of December 31, 2016. In addition, the Company had joint venture interests in six retail properties and two office buildings totaling approximately 1.4 million square feet of GLA as of December 31, 2016.

About Washington Real Estate Investment Trust

Washington Real Estate Investment Trust is a self-administered equity real estate investment trust. The Company’s business consists of the ownership and operation of real property in the greater Washington metro region. The Company owns a diversified portfolio of office buildings, multifamily buildings and retail centers. The Company’s segments include office, multifamily and retail. The Company’s office properties provide office space for various types of businesses and professions. The Company’s multifamily properties provide rental housing for individuals and families throughout the Washington metro region. Its retail properties are typically grocery store anchored neighborhood centers that include other small shop tenants or regional power centers with various junior box tenants. As of April 4, 2017, it owned a diversified portfolio of 50 properties, totaling approximately 6.0 million square feet of commercial space and 4,480 residential units, and land held for development.

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