Critical Contrast: Equity Commonwealth (NYSE:EQC) and Empire State Realty Trust (NYSE:ESRT)

Equity Commonwealth (NYSE:EQC) and Empire State Realty Trust (NYSE:ESRT) are both small-cap real estate companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, earnings, risk, profitability, valuation and institutional ownership.

Insider & Institutional Ownership

96.0% of Equity Commonwealth shares are owned by institutional investors. Comparatively, 67.1% of Empire State Realty Trust shares are owned by institutional investors. 2.1% of Equity Commonwealth shares are owned by company insiders. Comparatively, 15.2% of Empire State Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Equity Commonwealth and Empire State Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Equity Commonwealth	82.00%	2.09%	1.96%
Empire State Realty Trust	0.93%	0.40%	0.17%

Earnings & Valuation

This table compares Equity Commonwealth and Empire State Realty Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Equity Commonwealth	$58.43 million	2.90	$91.16 million	$0.39	4.05
Empire State Realty Trust	$782.82 million	1.05	$47.60 million	$0.07	67.79

Equity Commonwealth has higher earnings, but lower revenue than Empire State Realty Trust. Equity Commonwealth is trading at a lower price-to-earnings ratio than Empire State Realty Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Equity Commonwealth and Empire State Realty Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Equity Commonwealth	0	0	0	0	0.00
Empire State Realty Trust	2	1	0	0	1.33

Empire State Realty Trust has a consensus target price of $5.50, suggesting a potential upside of 15.91%. Given Empire State Realty Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Empire State Realty Trust is more favorable than Equity Commonwealth.

Volatility and Risk

Equity Commonwealth has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500. Comparatively, Empire State Realty Trust has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500.

Summary

Equity Commonwealth beats Empire State Realty Trust on 7 of the 13 factors compared between the two stocks.

About Equity Commonwealth

Equity Commonwealth (NYSE: EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. EQC's portfolio is comprised of four properties totaling 1.5 million square feet.

About Empire State Realty Trust

Empire State Realty Trust, Inc. (NYSE: ESRT) is a NYC-focused REIT that owns and operates a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets. The company is the recognized leader in energy efficiency and indoor environmental quality. ESRT’s flagship Empire State Building – the “World’s Most Famous Building” – includes its Observatory, Tripadvisor’s 2023 Travelers’ Choice Awards: Best of the Best the #1 attraction in the US for two consecutive years. As of September 30, 2023, ESRT’s portfolio is comprised of approximately 8.6 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 727 residential units across three multifamily properties.