Financial Review: Alexander’s (NYSE:ALX) and Orion Office REIT (NYSE:ONL)

Alexander’s (NYSE:ALX) and Orion Office REIT (NYSE:ONL) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, profitability, earnings, analyst recommendations, risk and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Alexander’s	19.19%	21.45%	3.12%
Orion Office REIT	-50.76%	-10.28%	-6.26%

Volatility and Risk

Alexander’s has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500. Comparatively, Orion Office REIT has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500.

Valuation & Earnings

This table compares Alexander’s and Orion Office REIT”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alexander’s	$219.89 million	5.33	$43.44 million	$7.72	29.75
Orion Office REIT	$155.67 million	0.75	-$57.30 million	($1.54)	-1.34

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

Dividends

Alexander’s pays an annual dividend of $18.00 per share and has a dividend yield of 7.8%. Orion Office REIT pays an annual dividend of $0.08 per share and has a dividend yield of 3.9%. Alexander’s pays out 233.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Orion Office REIT pays out -5.2% of its earnings in the form of a dividend. Alexander’s has raised its dividend for 1 consecutive years. Alexander’s is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

32.0% of Alexander’s shares are owned by institutional investors. Comparatively, 79.9% of Orion Office REIT shares are owned by institutional investors. 26.3% of Alexander’s shares are owned by insiders. Comparatively, 0.2% of Orion Office REIT shares are owned by 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.

Analyst Recommendations

This is a summary of current recommendations and price targets for Alexander’s and Orion Office REIT, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alexander’s	1	0	0	0	1.00
Orion Office REIT	0	1	0	0	2.00

Alexander’s presently has a consensus target price of $125.00, suggesting a potential downside of 45.58%. Given Alexander’s’ higher probable upside, research analysts clearly believe Alexander’s is more favorable than Orion Office REIT.

Summary

Alexander’s beats Orion Office REIT on 12 of the 16 factors compared between the two stocks.

About Alexander’s

Alexander’s, Inc. (NYSE: ALX) is a real estate investment trust (REIT), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties. All references to we, us, our, Company and Alexander’s refer to Alexander’s, Inc. and its consolidated subsidiaries. We are managed by, and our properties are leased and developed by, Vornado Realty Trust (Vornado) (NYSE: VNO). We have five properties in New York City.

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.