Critical Survey: Highwoods Properties (NYSE:HIW) and Orion Office REIT (NYSE:ONL)

Orion Office REIT (NYSE:ONL) and Highwoods Properties (NYSE:HIW) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, dividends, institutional ownership, earnings, valuation and profitability.

Risk and Volatility

Orion Office REIT has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500.

Earnings and Valuation

This table compares Orion Office REIT and Highwoods Properties”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orion Office REIT	$147.65 million	0.77	-$139.31 million	($2.49)	-0.81
Highwoods Properties	$806.11 million	2.81	$159.61 million	$1.46	14.12

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

Profitability

This table compares Orion Office REIT and Highwoods Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Orion Office REIT	-94.35%	-20.13%	-11.12%
Highwoods Properties	20.10%	6.86%	2.64%

Institutional and Insider Ownership

80.0% of Orion Office REIT shares are owned by institutional investors. Comparatively, 96.3% of Highwoods Properties shares are owned by institutional investors. 0.2% of Orion Office REIT shares are owned by insiders. Comparatively, 1.9% of Highwoods Properties shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings for Orion Office REIT and Highwoods Properties, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orion Office REIT	1	1	1	0	2.00
Highwoods Properties	1	5	2	0	2.13

Orion Office REIT presently has a consensus target price of $3.00, suggesting a potential upside of 48.88%. Highwoods Properties has a consensus target price of $27.78, suggesting a potential upside of 34.78%. Given Orion Office REIT’s higher possible upside, research analysts plainly believe Orion Office REIT is more favorable than Highwoods Properties.

Dividends

Orion Office REIT pays an annual dividend of $0.08 per share and has a dividend yield of 4.0%. Highwoods Properties pays an annual dividend of $2.00 per share and has a dividend yield of 9.7%. Orion Office REIT pays out -3.2% of its earnings in the form of a dividend. Highwoods Properties pays out 137.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Highwoods Properties beats Orion Office REIT on 13 of the 16 factors compared between the two stocks.

About Orion Office REIT

Orion Office REIT specializes in the ownership, acquisition and management of a diversified portfolio of mission-critical and corporate headquarters office buildings in high-quality suburban markets across the U.S. The portfolio is leased primarily on a single-tenant net lease basis to creditworthy tenants. The company's team of experienced industry leaders employs a proven, cycle-tested investment evaluation framework which serves as the lens through which capital allocation decisions are made for the current portfolio and future acquisitions.

About Highwoods Properties

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (REIT) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders.