PS Business Parks (NYSE: PSB) and Lexington Realty Trust (NYSE:LXP) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, institutional ownership, earnings, valuation and profitability.
This table compares PS Business Parks and Lexington Realty Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|PS Business Parks||39.78%||16.95%||7.69%|
|Lexington Realty Trust||17.96%||5.29%||2.00%|
Valuation and Earnings
This table compares PS Business Parks and Lexington Realty Trust’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|PS Business Parks||$387.39 million||9.05||$128.02 million||$3.00||42.87|
|Lexington Realty Trust||$429.50 million||5.59||$95.62 million||$0.27||36.93|
PS Business Parks has higher earnings, but lower revenue than Lexington Realty Trust. Lexington Realty Trust 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.
Risk & Volatility
PS Business Parks has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, Lexington Realty Trust has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500.
This is a summary of recent recommendations for PS Business Parks and Lexington Realty Trust, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|PS Business Parks||1||1||0||0||1.50|
|Lexington Realty Trust||1||6||0||0||1.86|
Lexington Realty Trust has a consensus target price of $10.55, suggesting a potential upside of 5.82%. Given Lexington Realty Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Lexington Realty Trust is more favorable than PS Business Parks.
PS Business Parks pays an annual dividend of $3.40 per share and has a dividend yield of 2.6%. Lexington Realty Trust pays an annual dividend of $0.70 per share and has a dividend yield of 7.0%. PS Business Parks pays out 113.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lexington Realty Trust pays out 259.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PS Business Parks has increased its dividend for 3 consecutive years and Lexington Realty Trust has increased its dividend for 6 consecutive years. Lexington Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider and Institutional Ownership
72.0% of PS Business Parks shares are owned by institutional investors. Comparatively, 74.0% of Lexington Realty Trust shares are owned by institutional investors. 1.6% of PS Business Parks shares are owned by insiders. Comparatively, 3.1% of Lexington Realty Trust shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
PS Business Parks Company Profile
PS Business Parks, Inc. is a self-advised and self-managed real estate investment trust (REIT). The Company owns, operates and develops commercial properties, primarily multi-tenant flex, office and industrial parks. It focuses on owning concentrated business parks. PS Business Parks, L.P. (the Operating Partnership) is a California limited partnership, which owns directly or indirectly substantially all of its assets and through, which the Company conducts substantially all of its business. PSB is the partner of the Operating Partnership and, as of December 31, 2016, owned 77.9% of the common partnership units. The remaining common partnership units are owned by Public Storage (PS). As of December 31, 2016, the Company owned and operated 28.1 million rentable square feet of commercial space, comprising 99 business parks, in the states, including California, Texas, Virginia, Florida, Maryland and Washington. It also manages 684,000 rentable square feet on behalf of PS.
Lexington Realty Trust Company Profile
Lexington Realty Trust is a real estate investment trust (REIT). The Company owns a portfolio of equity and debt investments in single-tenant commercial properties. As of December 31, 2016, the Company had equity ownership interests in approximately 195 consolidated real estate properties, located in 40 states and containing an aggregate of approximately 43.3 million square feet of space, approximately 96.0% of which was leased. The Company conducts its operations either directly or indirectly through property owner subsidiaries and lender subsidiaries, which are single purpose entities; an operating partnership, Lepercq Corporate Income Fund L.P. (LCIF), in which the Company is the sole unit holder of the general partner and the sole unit holder of the limited partner that holds a majority of the limited partner interests; Lexington Realty Advisors, Inc. (LRA), a subsidiary of the Company, and investments in joint ventures.
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