Critical Comparison: Whitestone REIT (NYSE:WSR) versus CatchMark Timber Trust (NYSE:CTT)

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

Volatility & Risk

Whitestone REIT has a beta of 1.3, indicating that its share price is 30% more volatile than the S&P 500. Comparatively, CatchMark Timber Trust has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.

Valuation & Earnings

This table compares Whitestone REIT and CatchMark Timber Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Whitestone REIT $119.25 million 3.43 $23.68 million $1.06 9.08
CatchMark Timber Trust $106.71 million 4.75 -$93.32 million ($2.05) -5.07

Whitestone REIT has higher revenue and earnings than CatchMark Timber Trust. CatchMark Timber 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 Whitestone REIT and CatchMark Timber Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Whitestone REIT 16.59% 5.78% 1.87%
CatchMark Timber Trust -25.76% -16.84% -4.15%

Institutional and Insider Ownership

56.0% of Whitestone REIT shares are held by institutional investors. Comparatively, 76.9% of CatchMark Timber Trust shares are held by institutional investors. 6.3% of Whitestone REIT shares are held by insiders. Comparatively, 1.0% of CatchMark Timber Trust shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Whitestone REIT pays an annual dividend of $0.43 per share and has a dividend yield of 4.5%. CatchMark Timber Trust pays an annual dividend of $0.54 per share and has a dividend yield of 5.2%. Whitestone REIT pays out 40.6% of its earnings in the form of a dividend. CatchMark Timber Trust pays out -26.3% 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. Whitestone REIT has increased its dividend for 1 consecutive years and CatchMark Timber Trust has increased its dividend for 1 consecutive years. CatchMark Timber Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current recommendations and price targets for Whitestone REIT and CatchMark Timber Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Whitestone REIT 0 2 1 0 2.33
CatchMark Timber Trust 0 2 3 0 2.60

Whitestone REIT presently has a consensus price target of $9.00, indicating a potential downside of 6.44%. CatchMark Timber Trust has a consensus price target of $11.63, indicating a potential upside of 11.89%. Given CatchMark Timber Trust’s stronger consensus rating and higher probable upside, analysts clearly believe CatchMark Timber Trust is more favorable than Whitestone REIT.

Whitestone REIT Company Profile

Whitestone is a community-centered shopping center REIT that acquires, owns, manages, develops and redevelops high-quality open-air neighborhood centers primarily in the largest, fastest-growing and most affluent markets in the Sunbelt. Whitestone seeks to create communities that thrive through creating local connections between consumers in the surrounding communities and a well-crafted mix of national, regional and local tenants that provide daily necessities, needed services, entertainment and experiences. Whitestone is a monthly dividend paying stock and has consistently paid dividends for over 15 years. Whitestone's strong, balanced and managed capital structure provides stability and flexibility for growth and positions Whitestone to perform well through economic cycles.

CatchMark Timber Trust Company Profile

CatchMark (NYSE: CTT) seeks to deliver consistent and growing per share cash flow from disciplined acquisitions and superior management of prime timberlands located in high demand U.S. mill markets. Concentrating on maximizing cash flows throughout business cycles, the company strategically harvests its high-quality timberlands to produce durable revenue growth and takes advantage of proximate mill markets, which provide a reliable outlet for merchantable inventory. Headquartered in Atlanta and focused exclusively on timberland ownership and management, CatchMark began operations in 2007 and owns interests in 1.5 million acres* of timberlands located in Alabama, Florida, Georgia, North Carolina, Oregon, South Carolina and Texas.

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