Critical Contrast: City Office REIT (NYSE:CIO) vs. Sun Communities (NYSE:SUI)

Sun Communities (NYSE:SUI) and City Office REIT (NYSE:CIO) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, risk, profitability, dividends and valuation.

Valuation & Earnings

This table compares Sun Communities and City Office REIT”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sun Communities	$3.20 billion	5.29	-$201.00 million	$0.74	179.58
City Office REIT	$171.13 million	1.20	-$2.68 million	($0.62)	-8.22

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

Profitability

This table compares Sun Communities and City Office REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sun Communities	7.46%	3.21%	1.40%
City Office REIT	-10.33%	-2.74%	-1.19%

Volatility and Risk

Sun Communities has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500. Comparatively, City Office REIT has a beta of 2, suggesting that its share price is 100% more volatile than the S&P 500.

Dividends

Sun Communities pays an annual dividend of $3.76 per share and has a dividend yield of 2.8%. City Office REIT pays an annual dividend of $0.40 per share and has a dividend yield of 7.9%. Sun Communities pays out 508.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. City Office REIT pays out -64.5% of its earnings in the form of a dividend. City Office REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings for Sun Communities and City Office REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sun Communities	1	6	5	0	2.33
City Office REIT	0	0	0	0	0.00

Sun Communities presently has a consensus target price of $135.55, indicating a potential upside of 2.00%. Given Sun Communities’ stronger consensus rating and higher possible upside, analysts clearly believe Sun Communities is more favorable than City Office REIT.

Institutional and Insider Ownership

99.6% of Sun Communities shares are held by institutional investors. Comparatively, 67.5% of City Office REIT shares are held by institutional investors. 1.9% of Sun Communities shares are held by insiders. Comparatively, 3.9% of City Office REIT shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Sun Communities beats City Office REIT on 11 of the 16 factors compared between the two stocks.

About Sun Communities

Established in 1975, Sun Communities, Inc. became a publicly owned corporation in December 1993. The Company is a fully integrated REIT listed on the New York Stock Exchange under the symbol: SUI. As of December 31, 2023, the Company owned, operated, or had an interest in a portfolio of 667 developed MH, RV and Marina properties comprising 179,310 developed sites and approximately 48,030 wet slips and dry storage spaces in the U.S., the UK and Canada.

About City Office REIT

City Office REIT is an internally-managed real estate company focused on acquiring, owning and operating high-quality office properties located predominantly in Sun Belt markets. City Office currently owns or has a controlling interest in 5.7 million square feet of office properties. The Company has elected to be taxed as a real estate investment trust for U.S. federal income tax purposes.