Contrasting Retail Opportunity Investments (ROIC) & PS Business Parks (PSB)

Retail Opportunity Investments (NASDAQ:ROIC) and PS Business Parks (NYSE:PSB) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, profitability, risk, valuation and earnings.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Retail Opportunity Investments and PS Business Parks, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Retail Opportunity Investments 1 4 1 0 2.00
PS Business Parks 1 2 0 0 1.67

Retail Opportunity Investments presently has a consensus price target of $18.25, indicating a potential upside of 7.99%. PS Business Parks has a consensus price target of $120.00, indicating a potential downside of 22.83%. Given Retail Opportunity Investments’ stronger consensus rating and higher probable upside, equities analysts plainly believe Retail Opportunity Investments is more favorable than PS Business Parks.

Risk & Volatility

Retail Opportunity Investments has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, PS Business Parks has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500.

Institutional & Insider Ownership

93.3% of Retail Opportunity Investments shares are held by institutional investors. Comparatively, 71.8% of PS Business Parks shares are held by institutional investors. 2.4% of Retail Opportunity Investments shares are held by company insiders. Comparatively, 1.5% of PS Business Parks shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Retail Opportunity Investments pays an annual dividend of $0.79 per share and has a dividend yield of 4.7%. PS Business Parks pays an annual dividend of $4.20 per share and has a dividend yield of 2.7%. Retail Opportunity Investments pays out 69.3% of its earnings in the form of a dividend. PS Business Parks pays out 64.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Retail Opportunity Investments has raised its dividend for 9 consecutive years and PS Business Parks has raised its dividend for 5 consecutive years. Retail Opportunity Investments is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Retail Opportunity Investments and PS Business Parks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Retail Opportunity Investments 14.45% 3.25% 1.41%
PS Business Parks 54.82% 22.54% 11.05%

Earnings & Valuation

This table compares Retail Opportunity Investments and PS Business Parks’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Retail Opportunity Investments $295.80 million 6.51 $42.73 million $1.14 14.82
PS Business Parks $413.52 million 10.29 $226.70 million $6.47 24.03

PS Business Parks has higher revenue and earnings than Retail Opportunity Investments. Retail Opportunity Investments is trading at a lower price-to-earnings ratio than PS Business Parks, indicating that it is currently the more affordable of the two stocks.

Summary

PS Business Parks beats Retail Opportunity Investments on 9 of the 17 factors compared between the two stocks.

About Retail Opportunity Investments

Retail Opportunity Investments Corp. (NASDAQ: ROIC), is a fully-integrated, self-managed real estate investment trust (REIT) that specializes in the acquisition, ownership and management of grocery-anchored shopping centers located in densely-populated, metropolitan markets across the West Coast. As of December 31, 2018, ROIC owned 91 shopping centers encompassing approximately 10.5 million square feet. ROIC is the largest publicly-traded, grocery-anchored shopping center REIT focused exclusively on the West Coast. ROIC is a member of the S&P SmallCap 600 Index and has investment-grade corporate debt ratings from Moody's Investor Services and Standard & Poor's.

About PS Business Parks

PS Business Parks, Inc., a member of the S&P SmallCap 600, is a REIT that acquires, develops, owns and operates commercial properties, primarily multi-tenant industrial, flex and office space. As of September 30, 2018, the Company wholly owned 28.3 million rentable square feet with approximately 5,050 commercial customers in six states and held a 95.0% interest in a 395-unit apartment complex.

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