Critical Analysis: Retail Opportunity Investments (ROIC) versus Equinix (EQIX)

Retail Opportunity Investments (NASDAQ: EQIX) and Equinix (NASDAQ:EQIX) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

Insider & Institutional Ownership

97.4% of Equinix shares are owned by institutional investors. 2.4% of Retail Opportunity Investments shares are owned by company insiders. Comparatively, 0.5% of Equinix shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Retail Opportunity Investments and Equinix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Retail Opportunity Investments 13.23% 2.90% 1.27%
Equinix 5.71% 7.22% 2.57%

Analyst Recommendations

This is a summary of recent ratings and price targets for Retail Opportunity Investments and Equinix, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Retail Opportunity Investments 1 6 2 0 2.11
Equinix 0 2 18 0 2.90

Retail Opportunity Investments currently has a consensus price target of $19.64, indicating a potential upside of 0.73%. Equinix has a consensus price target of $508.45, indicating a potential upside of 17.55%. Given Equinix’s stronger consensus rating and higher possible upside, analysts clearly believe Equinix is more favorable than Retail Opportunity Investments.

Dividends

Retail Opportunity Investments pays an annual dividend of $0.78 per share and has a dividend yield of 4.0%. Equinix pays an annual dividend of $9.12 per share and has a dividend yield of 2.1%. Retail Opportunity Investments pays out 68.4% of its earnings in the form of a dividend. Equinix pays out 49.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Retail Opportunity Investments has raised its dividend for 8 consecutive years and Equinix has raised its dividend for 2 consecutive years. Retail Opportunity Investments is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Retail Opportunity Investments has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500. Comparatively, Equinix has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500.

Valuation & Earnings

This table compares Retail Opportunity Investments and Equinix’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Retail Opportunity Investments $273.26 million 8.05 $38.47 million $1.14 17.11
Equinix $4.37 billion 7.87 $232.98 million $18.53 23.34

Equinix has higher revenue and earnings than Retail Opportunity Investments. Retail Opportunity Investments is trading at a lower price-to-earnings ratio than Equinix, indicating that it is currently the more affordable of the two stocks.

Summary

Equinix beats Retail Opportunity Investments on 11 of the 17 factors compared between the two stocks.

Retail Opportunity Investments Company Profile

Retail Opportunity Investments Corp. (NASDAQ:ROIC), is a fully-integrated, self-managed real estate investment trust (REIT) that specializes in the acquisition, ownership and management of grocery-anchored shopping centers located in densely-populated, metropolitan markets across the West Coast. As of June 30, 2018, ROIC owned 92 shopping centers encompassing approximately 10.6 million square feet. ROIC is the largest publicly-traded, grocery-anchored shopping center REIT focused exclusively on the West Coast. ROIC is a member of the S&P SmallCap 600 Index and has investment-grade corporate debt ratings from Moody's Investor Services and Standard & Poor's. Additional information is available at: www.roireit.net.

Equinix Company Profile

Equinix, Inc. (Nasdaq: EQIX) connects the world's leading businesses to their customers, employees and partners inside the most-interconnected data centers. In 52 markets across five continents, Equinix is where companies come together to realize new opportunities and accelerate their business, IT and cloud strategies.

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