Reviewing Franklin Street Properties (NYSE:FSP) and NNN REIT (NYSE:NNN)

Franklin Street Properties (NYSE:FSP) and NNN REIT (NYSE:NNN) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Insider & Institutional Ownership

61.4% of Franklin Street Properties shares are owned by institutional investors. Comparatively, 90.0% of NNN REIT shares are owned by institutional investors. 6.2% of Franklin Street Properties shares are owned by company insiders. Comparatively, 0.8% of NNN REIT shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Franklin Street Properties pays an annual dividend of $0.04 per share and has a dividend yield of 2.1%. NNN REIT pays an annual dividend of $2.26 per share and has a dividend yield of 5.5%. Franklin Street Properties pays out -7.1% of its earnings in the form of a dividend. NNN REIT pays out 104.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NNN REIT has increased its dividend for 34 consecutive years. NNN REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Franklin Street Properties has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, NNN REIT has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.

Valuation and Earnings

This table compares Franklin Street Properties and NNN REIT’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin Street Properties	$145.71 million	1.35	-$48.11 million	($0.56)	-3.39
NNN REIT	$828.11 million	9.14	$392.34 million	$2.16	19.17

NNN REIT has higher revenue and earnings than Franklin Street Properties. Franklin Street Properties is trading at a lower price-to-earnings ratio than NNN REIT, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Franklin Street Properties and NNN REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franklin Street Properties	-41.73%	-7.98%	-4.95%
NNN REIT	47.38%	9.45%	4.64%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Franklin Street Properties and NNN REIT, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin Street Properties	0	0	0	0	N/A
NNN REIT	0	3	2	0	2.40

Franklin Street Properties presently has a consensus price target of $2.50, suggesting a potential upside of 32.28%. NNN REIT has a consensus price target of $44.50, suggesting a potential upside of 7.59%. Given Franklin Street Properties’ higher possible upside, research analysts plainly believe Franklin Street Properties is more favorable than NNN REIT.

Summary

NNN REIT beats Franklin Street Properties on 13 of the 16 factors compared between the two stocks.

About Franklin Street Properties

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on infill and central business district (CBD) office properties in the U.S. Sunbelt and Mountain West, as well as select opportunistic markets. FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes.

About NNN REIT

NNN REIT invests primarily in high-quality retail properties subject generally to long-term, net leases. As of December 31, 2023, the company owned 3,532 properties in 49 states with a gross leasable area of approximately 36.0 million square feet and a weighted average remaining lease term of 10.1 years. NNN is one of only three publicly traded REITs to have increased annual dividends for 34 or more consecutive years.