Financial Review: Empire State Realty Trust (NYSE:ESRT) and JBG SMITH Properties (NYSE:JBGS)

Empire State Realty Trust (NYSE:ESRT) and JBG SMITH Properties (NYSE:JBGS) 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 Empire State Realty Trust and JBG SMITH Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Empire State Realty Trust	6.45%	2.84%	1.14%
JBG SMITH Properties	-26.22%	-7.26%	-2.74%

Earnings and Valuation

This table compares Empire State Realty Trust and JBG SMITH Properties”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Empire State Realty Trust	$767.92 million	1.54	$53.24 million	$0.28	25.13
JBG SMITH Properties	$547.31 million	2.31	-$79.98 million	($1.67)	-9.24

Empire State Realty Trust has higher revenue and earnings than JBG SMITH Properties. JBG SMITH Properties 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.

Insider & Institutional Ownership

67.1% of Empire State Realty Trust shares are owned by institutional investors. Comparatively, 98.5% of JBG SMITH Properties shares are owned by institutional investors. 14.0% of Empire State Realty Trust shares are owned by insiders. Comparatively, 4.4% of JBG SMITH Properties 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.

Volatility and Risk

Empire State Realty Trust has a beta of 1.39, indicating that its stock price is 39% more volatile than the S&P 500. Comparatively, JBG SMITH Properties has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Empire State Realty Trust and JBG SMITH Properties, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Empire State Realty Trust	1	0	2	0	2.33
JBG SMITH Properties	2	0	0	0	1.00

Empire State Realty Trust presently has a consensus target price of $11.00, suggesting a potential upside of 56.36%. JBG SMITH Properties has a consensus target price of $16.00, suggesting a potential upside of 3.66%. Given Empire State Realty Trust’s stronger consensus rating and higher probable upside, research analysts clearly believe Empire State Realty Trust is more favorable than JBG SMITH Properties.

Dividends

Empire State Realty Trust pays an annual dividend of $0.14 per share and has a dividend yield of 2.0%. JBG SMITH Properties pays an annual dividend of $0.70 per share and has a dividend yield of 4.5%. Empire State Realty Trust pays out 50.0% of its earnings in the form of a dividend. JBG SMITH Properties pays out -41.9% 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. JBG SMITH Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Empire State Realty Trust beats JBG SMITH Properties on 12 of the 16 factors compared between the two stocks.

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.

About JBG SMITH Properties

JBG SMITH Properties is a real estate investment trust, which engages in owning, operating, investing in, and developing a portfolio of mixed-use properties. It operates through the following segments: Multifamily, Commercial, and Other. The Multifamily segment refers to the commercial buildings with public areas, retail spaces, and walkable streets. The Commercial segment rents to federal government tenants. The Other segment relates to development assets, corporate entities, land assets for which are the ground lessor and the elimination of inter-segment activity. The company was founded on October 27, 2016, and is headquartered in Bethesda, MD.