Analyzing Whitestone REIT (NYSE:WSR) and Service Properties Trust (NASDAQ:SVC)

Service Properties Trust (NASDAQ:SVC) and Whitestone REIT (NYSE:WSR) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Dividends

Service Properties Trust pays an annual dividend of $0.04 per share and has a dividend yield of 1.5%. Whitestone REIT pays an annual dividend of $0.54 per share and has a dividend yield of 4.0%. Service Properties Trust pays out -2.7% of its earnings in the form of a dividend. Whitestone REIT pays out 131.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares Service Properties Trust and Whitestone REIT”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Service Properties Trust	$1.88 billion	0.23	-$32.78 million	($1.47)	-1.76
Whitestone REIT	$152.00 million	4.51	$19.18 million	$0.41	33.05

Whitestone REIT has lower revenue, but higher earnings than Service Properties Trust. Service Properties Trust is trading at a lower price-to-earnings ratio than Whitestone REIT, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Service Properties Trust and Whitestone REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Service Properties Trust	-12.87%	-22.67%	-3.37%
Whitestone REIT	13.97%	4.98%	1.88%

Institutional and Insider Ownership

77.6% of Service Properties Trust shares are held by institutional investors. Comparatively, 69.5% of Whitestone REIT shares are held by institutional investors. 1.4% of Service Properties Trust shares are held by company insiders. Comparatively, 5.5% of Whitestone REIT shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Service Properties Trust has a beta of 2.19, meaning that its stock price is 119% more volatile than the S&P 500. Comparatively, Whitestone REIT has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Service Properties Trust and Whitestone REIT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Service Properties Trust	1	0	1	0	2.00
Whitestone REIT	0	1	3	0	2.75

Service Properties Trust currently has a consensus target price of $5.38, suggesting a potential upside of 107.53%. Whitestone REIT has a consensus target price of $15.67, suggesting a potential upside of 15.62%. Given Service Properties Trust’s higher probable upside, equities analysts clearly believe Service Properties Trust is more favorable than Whitestone REIT.

Summary

Whitestone REIT beats Service Properties Trust on 11 of the 16 factors compared between the two stocks.

About Service Properties Trust

Service Properties Trust (Nasdaq: SVC) is a real estate investment trust with over $11 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of December 31, 2023, SVC owned 221 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of December 31, 2023, SVC also owned 752 service-focused retail net lease properties totaling approximately 13.3 million square feet throughout the United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of December 31, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA.

About Whitestone REIT

Whitestone REIT (NYSE: WSR) is a community-centered real estate investment trust (REIT) that acquires, owns, operates, and develops open-air, retail centers located in some of the fastest growing markets in the country: Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio. Our centers are convenience focused: merchandised with a mix of service-oriented tenants providing food (restaurants and grocers), self-care (health and fitness), services (financial and logistics), education and entertainment to the surrounding communities. The Company believes its strong community connections and deep tenant relationships are key to the success of its current centers and its acquisition strategy.