Analyzing Highwoods Properties (HIW) and TIER REIT (TIER)

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

Insider and Institutional Ownership

96.6% of Highwoods Properties shares are held by institutional investors. Comparatively, 57.5% of TIER REIT shares are held by institutional investors. 1.9% of Highwoods Properties shares are held by company insiders. Comparatively, 1.2% of TIER REIT shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Highwoods Properties has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, TIER REIT has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Highwoods Properties 22.02% 7.09% 3.36%
TIER REIT 40.68% 12.86% 5.60%

Earnings & Valuation

This table compares Highwoods Properties and TIER REIT’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Highwoods Properties $665.63 million 7.86 $524.29 million $1.47 34.48
TIER REIT $242.82 million 3.86 -$29.41 million $1.82 10.75

Highwoods Properties has higher revenue and earnings than TIER REIT. TIER 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.

Analyst Recommendations

This is a summary of current recommendations and price targets for Highwoods Properties and TIER REIT, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Highwoods Properties 0 4 3 0 2.43
TIER REIT 0 0 2 0 3.00

Highwoods Properties currently has a consensus price target of $54.80, indicating a potential upside of 8.11%. TIER REIT has a consensus price target of $20.50, indicating a potential upside of 4.75%. Given Highwoods Properties’ higher probable upside, research analysts clearly believe Highwoods Properties is more favorable than TIER REIT.

Dividends

Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.5%. TIER REIT pays an annual dividend of $0.72 per share and has a dividend yield of 3.7%. Highwoods Properties pays out 119.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TIER REIT pays out 39.6% of its earnings in the form of a dividend. TIER REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

About Highwoods Properties

Highwoods Properties, Inc. is an office real estate investment trust (REIT). The Company’s primary business is the operation, acquisition and development of office properties. The Company’s segments include Office and Other. The Company owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Greensboro, Memphis, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa. The Company conducts its activities through Highwoods Realty Limited Partnership (the Operating Partnership). The Company offers a range of real estate services to its customers. The Company offers services, including asset management, construction management, design and space planning, and renovation and re-positioning. The Company provides its customers with services, such as build-to-suit construction and space modification, including tenant improvements and expansions.

About TIER REIT

TIER REIT, Inc. is a real estate investment trust. The Company’s business consists of owning, acquiring, developing, operating, investing in, and disposing of real estate assets. The Company’s business is conducted through Tier Operating Partnership LP (Tier OP). As of December 31, 2016, the Company owned interests in 29 operating office properties, one non-operating property and one development property located in 13 markets throughout the United States. It owns properties located in metropolitan cities and suburban markets in the United States. The Company’s office properties include The Terrace Office Park, Domain 3, Domain 4, 5950 Sherry Lane, Burnett Plaza, Loop Central, One BriarLake Plaza, Three Eldridge Place, Eisenhower I, Forum Office Park, 500 E. Pratt, Woodcrest Corporate Center and 111 Woodcrest. The Company’s properties are located in Austin, Dallas, Houston, Charlotte, Nashville, Atlanta and Denver.

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