Contrasting NNN REIT (NYSE:NNN) and Essential Properties Realty Trust (NYSE:EPRT)

Essential Properties Realty Trust (NYSE:EPRT) and NNN REIT (NYSE:NNN) are both mid-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Essential Properties Realty Trust and NNN REIT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Essential Properties Realty Trust	0	3	11	0	2.79
NNN REIT	1	9	3	0	2.15

Essential Properties Realty Trust currently has a consensus target price of $34.91, indicating a potential upside of 10.62%. NNN REIT has a consensus target price of $44.54, indicating a potential upside of 8.76%. Given Essential Properties Realty Trust’s stronger consensus rating and higher probable upside, analysts clearly believe Essential Properties Realty Trust is more favorable than NNN REIT.

Dividends

Essential Properties Realty Trust pays an annual dividend of $1.18 per share and has a dividend yield of 3.7%. NNN REIT pays an annual dividend of $2.32 per share and has a dividend yield of 5.7%. Essential Properties Realty Trust pays out 103.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NNN REIT pays out 107.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NNN REIT has increased its dividend for 35 consecutive years. NNN REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

97.0% of Essential Properties Realty Trust shares are owned by institutional investors. Comparatively, 90.0% of NNN REIT shares are owned by institutional investors. 0.8% of Essential Properties Realty Trust shares are owned by insiders. Comparatively, 0.8% of NNN REIT shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Essential Properties Realty Trust and NNN REIT”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Essential Properties Realty Trust	$449.61 million	13.18	$203.00 million	$1.14	27.68
NNN REIT	$869.27 million	8.86	$396.83 million	$2.15	19.05

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

Volatility and Risk

Essential Properties Realty Trust has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500. Comparatively, NNN REIT has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.

Profitability

This table compares Essential Properties Realty Trust and NNN REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Essential Properties Realty Trust	45.15%	6.12%	3.76%
NNN REIT	45.65%	9.28%	4.51%

Summary

NNN REIT beats Essential Properties Realty Trust on 9 of the 17 factors compared between the two stocks.

About Essential Properties Realty Trust

Essential Properties Realty Trust, Inc., a real estate company, acquires, owns, and manages single-tenant properties in the United States. The company leases its properties to middle-market companies, such as restaurants, car washes, automotive services, medical and dental services, convenience stores, equipment rental, entertainment, early childhood education, grocery, and health and fitness on a long-term basis. As of December 31, 2021, it had a portfolio of 1, 451 properties. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2016 and is headquartered in Princeton, New Jersey.

About NNN REIT

NNN REIT invests primarily in high-quality retail properties subject generally to long-term, net leases. As of December 31, 2023, the company owned 3,532 properties in 49 states with a gross leasable area of approximately 36.0 million square feet and a weighted average remaining lease term of 10.1 years. NNN is one of only three publicly traded REITs to have increased annual dividends for 34 or more consecutive years.