Equity Commonwealth (EQC) and Lexington Realty Trust (LXP) Critical Survey

Equity Commonwealth (NYSE:EQC) and Lexington Realty Trust (NYSE:LXP) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, institutional ownership and profitability.

Dividends

Lexington Realty Trust pays an annual dividend of $0.71 per share and has a dividend yield of 8.1%. Equity Commonwealth does not pay a dividend. Lexington Realty Trust pays out 73.2% of its earnings in the form of a dividend. Lexington Realty Trust has increased its dividend for 7 consecutive years.

Analyst Ratings

This is a summary of recent ratings for Equity Commonwealth and Lexington Realty Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Equity Commonwealth 0 2 1 0 2.33
Lexington Realty Trust 2 2 2 0 2.00

Equity Commonwealth presently has a consensus target price of $33.00, indicating a potential upside of 4.53%. Lexington Realty Trust has a consensus target price of $8.60, indicating a potential downside of 2.38%. Given Equity Commonwealth’s stronger consensus rating and higher probable upside, analysts clearly believe Equity Commonwealth is more favorable than Lexington Realty Trust.

Risk and Volatility

Equity Commonwealth has a beta of 0.19, suggesting that its stock price is 81% less volatile than the S&P 500. Comparatively, Lexington Realty Trust has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500.

Institutional & Insider Ownership

97.2% of Equity Commonwealth shares are held by institutional investors. Comparatively, 75.0% of Lexington Realty Trust shares are held by institutional investors. 1.3% of Equity Commonwealth shares are held by company insiders. Comparatively, 3.3% of Lexington Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Equity Commonwealth and Lexington Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Equity Commonwealth 104.48% 7.35% 5.91%
Lexington Realty Trust 56.75% 19.03% 6.80%

Valuation & Earnings

This table compares Equity Commonwealth and Lexington Realty Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Equity Commonwealth $340.57 million 11.26 $29.65 million $0.92 34.32
Lexington Realty Trust $391.64 million 5.31 $85.58 million $0.97 9.08

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

Summary

Lexington Realty Trust beats Equity Commonwealth on 10 of the 17 factors compared between the two stocks.

Equity Commonwealth Company Profile

Equity Commonwealth operates as an internally managed and self-advised real estate investment trust. It engages in the ownership and operation of office properties. The company was founded by Barry M. Portnoy on October 9, 1986 and is headquartered in Chicago, IL.

Lexington Realty Trust Company Profile

Lexington Realty Trust (NYSE:LXP) is a publicly traded real estate investment trust (REIT) that owns a diversified portfolio of real estate assets consisting primarily of equity investments in single-tenant net-leased commercial properties across the United States. Lexington seeks to expand its portfolio through build-to-suit transactions, sale-leaseback transactions and other transactions, including acquisitions.

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