Critical Survey: Duke Realty Corporation (NYSE:DRE) versus Terreno Realty Corporation (TRNO)

Terreno Realty Corporation (NYSE: TRNO) and Duke Realty Corporation (NYSE:DRE) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, analyst recommendations, profitability, institutional ownership, dividends and valuation.

Volatility & Risk

Terreno Realty Corporation has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, Duke Realty Corporation has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Profitability

This table compares Terreno Realty Corporation and Duke Realty Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Terreno Realty Corporation 20.91% 3.13% 1.94%
Duke Realty Corporation 166.06% 8.72% 4.74%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Terreno Realty Corporation and Duke Realty Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Terreno Realty Corporation 0 5 4 0 2.44
Duke Realty Corporation 0 5 6 0 2.55

Terreno Realty Corporation presently has a consensus target price of $32.29, indicating a potential downside of 7.28%. Duke Realty Corporation has a consensus target price of $29.00, indicating a potential upside of 0.49%. Given Duke Realty Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Duke Realty Corporation is more favorable than Terreno Realty Corporation.

Earnings & Valuation

This table compares Terreno Realty Corporation and Duke Realty Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Terreno Realty Corporation $121.16 million 14.94 $65.43 million N/A N/A
Duke Realty Corporation $922.63 million 11.13 $508.55 million $4.03 7.16

Duke Realty Corporation has higher revenue and earnings than Terreno Realty Corporation.

Insider and Institutional Ownership

97.2% of Terreno Realty Corporation shares are owned by institutional investors. Comparatively, 92.5% of Duke Realty Corporation shares are owned by institutional investors. 3.0% of Terreno Realty Corporation shares are owned by insiders. Comparatively, 0.3% of Duke Realty Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Terreno Realty Corporation pays an annual dividend of $0.80 per share and has a dividend yield of 2.3%. Duke Realty Corporation pays an annual dividend of $0.76 per share and has a dividend yield of 2.6%. Duke Realty Corporation pays out 18.9% of its earnings in the form of a dividend. Terreno Realty Corporation has increased its dividend for 2 consecutive years and Duke Realty Corporation has increased its dividend for 4 consecutive years. Duke Realty Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Duke Realty Corporation beats Terreno Realty Corporation on 11 of the 16 factors compared between the two stocks.

About Terreno Realty Corporation

Terreno Realty Corporation acquires, owns and operates industrial real estate in coastal markets in the United States, such as Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington, District of Columbia (D.C.)/Baltimore. The Company invests in a range of industrial real estate, including warehouse/distribution, flex (including light industrial and research and development) and trans-shipment. As of December 31, 2016, the Company owned 166 buildings aggregating approximately 12 million square feet and five land parcels consisting of 22.8 acres. As of December 31, 2016, its properties were leased to 376 customers. The Company focuses on functional buildings in infill locations that may be shared by multiple tenants and that cater to customer demand within the various submarkets in which it operates.

About Duke Realty Corporation

Duke Realty Corporation is a self-managed real estate investment trust (REIT). The Company and Duke Realty Limited Partnership collectively specialize in the ownership, management and development of bulk distribution (industrial) and medical office real estate. It operates through three segments, the first two of which consist of the ownership and rental of industrial and medical office real estate investments. The operations of its industrial and medical office properties, as well as its rental operations, are collectively referred to as Rental Operations. The third segment includes real estate services, such as property management, asset management, leasing, development, general contracting and construction management. Its Service Operations segment also includes its taxable REIT subsidiary, through which certain of the segment’s operations are conducted. It maintains a Baa1 rating from Moody’s Investor Service, Inc. and a BBB+ rating from Standard & Poor’s Financial Services LLC.

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