Head to Head Review: Equity Commonwealth (NYSE:EQC) and Orion Office REIT (NYSE:ONL)

Orion Office REIT (NYSE:ONL) and Equity Commonwealth (NYSE:EQC) are both small-cap real estate companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, dividends, analyst recommendations, earnings and profitability.

Institutional & Insider Ownership

79.9% of Orion Office REIT shares are held by institutional investors. Comparatively, 96.0% of Equity Commonwealth shares are held by institutional investors. 1.6% of Orion Office REIT shares are held by company insiders. Comparatively, 2.1% of Equity Commonwealth shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Orion Office REIT and Equity Commonwealth, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orion Office REIT	1	0	1	0	2.00
Equity Commonwealth	0	0	0	0	0.00

Orion Office REIT currently has a consensus price target of $3.50, suggesting a potential upside of 20.94%. Given Orion Office REIT’s stronger consensus rating and higher possible upside, research analysts plainly believe Orion Office REIT is more favorable than Equity Commonwealth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Orion Office REIT	-65.66%	-14.85%	-7.95%
Equity Commonwealth	82.00%	2.09%	1.96%

Earnings & Valuation

This table compares Orion Office REIT and Equity Commonwealth”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orion Office REIT	$147.65 million	1.11	-$139.31 million	($1.69)	-1.71
Equity Commonwealth	$58.43 million	2.90	$91.16 million	$0.39	4.05

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

Risk and Volatility

Orion Office REIT has a beta of 1.57, suggesting that its share price is 57% more volatile than the S&P 500. Comparatively, Equity Commonwealth has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500.

Summary

Equity Commonwealth beats Orion Office REIT on 9 of the 14 factors compared between the two stocks.

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.

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.