Select Income REIT (NASDAQ: SIR) and DuPont Fabros Technology (NYSE:DFT) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, risk and institutional ownership.
This table compares Select Income REIT and DuPont Fabros Technology’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Select Income REIT||19.15%||4.36%||1.91%|
|DuPont Fabros Technology||26.98%||17.13%||4.69%|
Volatility and Risk
Select Income REIT has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500. Comparatively, DuPont Fabros Technology has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500.
This is a breakdown of current recommendations and price targets for Select Income REIT and DuPont Fabros Technology, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Select Income REIT||0||1||2||0||2.67|
|DuPont Fabros Technology||0||9||4||0||2.31|
Select Income REIT currently has a consensus target price of $19.75, indicating a potential downside of 22.06%. DuPont Fabros Technology has a consensus target price of $60.15, indicating a potential downside of 9.29%. Given DuPont Fabros Technology’s higher possible upside, analysts plainly believe DuPont Fabros Technology is more favorable than Select Income REIT.
Institutional & Insider Ownership
48.5% of Select Income REIT shares are held by institutional investors. 2.0% of Select Income REIT shares are held by company insiders. Comparatively, 5.6% of DuPont Fabros Technology shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Earnings and Valuation
This table compares Select Income REIT and DuPont Fabros Technology’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Select Income REIT||$462.01 million||4.91||$116.32 million||$1.00||25.34|
|DuPont Fabros Technology||N/A||N/A||N/A||$1.65||40.19|
Select Income REIT has higher revenue and earnings than DuPont Fabros Technology. Select Income REIT is trading at a lower price-to-earnings ratio than DuPont Fabros Technology, indicating that it is currently the more affordable of the two stocks.
Select Income REIT pays an annual dividend of $2.04 per share and has a dividend yield of 8.1%. DuPont Fabros Technology pays an annual dividend of $2.00 per share and has a dividend yield of 3.0%. Select Income REIT pays out 204.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DuPont Fabros Technology pays out 121.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Select Income REIT has increased its dividend for 5 consecutive years. Select Income REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
DuPont Fabros Technology beats Select Income REIT on 8 of the 14 factors compared between the two stocks.
About Select Income REIT
Select Income REIT is a real estate investment trust. The Company is engaged in the ownership of properties that include buildings and leased industrial lands that are primarily net leased to single tenants. As of December 31, 2016, the Company owned 121 properties (362 buildings, leasable land parcels and easements) with approximately 44.8 million rentable square feet. As of December 31, 2016, the Company’s properties consisted of 110 office and industrial properties (133 buildings) with approximately 27.0 million square feet located in 34 states throughout the mainland United States (Mainland Properties), and 11 properties (229 buildings, leasable land parcels and easements) located on the island of Oahu, Hawaii, with approximately 17.8 million rentable square feet that are primarily leased to industrial and commercial tenants (Hawaii Properties). As of December 31, 2016, the Company’s properties were leased to 312 different tenants.
About DuPont Fabros Technology
DuPont Fabros Technology, Inc. (DFT) is a real estate investment trust (REIT). The Company owns, acquires, develops and operates wholesale data centers. The Company’s customers include national and international enterprises across various industries, such as technology, Internet, content providers, cloud providers, media, communications, healthcare and financial services. Its data centers are located in four population centers: Northern Virginia; suburban Chicago, Illinois; Piscataway, New Jersey, and Santa Clara, California. As of December 31, 2016, the Company owned various properties, including 11 operating data centers facilities; five phases of existing data center facilities under development; one shell of a data center under development; two data center facilities with a phase or phases available for development, and parcels of land held for development of four data centers. As of December 31, 2016, the Company’s 11 data centers had a total of 3.3 million gross square feet.
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