Please ensure Javascript is enabled for purposes of website accessibility

1-Star Stocks Doomed to Drop: Vornado Realty Trust

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 8:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The returns on this one-star stock could lag the market average.

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, office REIT Vornado Realty (NYSE:VNO) has received the dreaded one-star ranking. Our data has shown that one-star stocks woefully lag the market average; conversely, five-star stocks outperform the S&P by a significant margin.

With that in mind, let's take a closer look at Vornado's business, and see what CAPS investors are saying about the stock right now.

Vornado facts

Headquarters

New York, New York

Market Cap

$7.61 billion

Industry

Real estate investment trust

TTM Revenue

$3.53 billion

Management

CEO Steven Roth
CFO Joseph Macnow

Funds From Operations payout ratio (average last five years and TTM)

60% and 49.8%

Competitors

Boston Properties (NYSE:BXP)
Brookfield Properties (NYSE:BPO)

CAPS members bearish on VNO also bearish on

Simon Property Group (NYSE:SPG)
KB Home (NYSE:KBH)

CAPS members bullish on VNO also bullish on

General Electric (NYSE:GE)
Citigroup (NYSE:C)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 163 of the 307 members who have rated Vornado -- or 53% -- believe the stock will underperform the S&P 500. These Fools include CAPS All-Star dexion10 and CAPS member Gamma1113.

Just yesterday, dexion10 summed up the bear case with a simple formula: "Commercial REIT in NYC with lots of leverage and falling rents... do the math friends."

In a pitch from last month, Gamma1113 shares that bearishness, writing:

[Vornado] has big exposure to commercial real estate in NYC as well as other large cities. Although we've seen a major decline in residential real estate, the Commercial RE sector has not yet seen much of a decline. I believe that with the recent turmoil in the financial markets and the rising [unemployment], commercial RE in the large cities will experience a major decline in the next 1-2 years. Although [Vornado] has [already] declined significantly from its peak, the valuations are still high and I expect it to decline much further in the coming year or so.

What do you think about Vornado, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy always gets a perfect score.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Vornado Realty Trust Stock Quote
Vornado Realty Trust
VNO
$29.54 (-2.77%) $0.84
Citigroup Inc. Stock Quote
Citigroup Inc.
C
$53.76 (-0.78%) $0.42
General Electric Company Stock Quote
General Electric Company
GE
$79.92 (-1.42%) $-1.15
KB Home Stock Quote
KB Home
KBH
$32.08 (-3.05%) $-1.01
Simon Property Group, Inc. Stock Quote
Simon Property Group, Inc.
SPG
$112.84 (-1.47%) $-1.68
Boston Properties, Inc. Stock Quote
Boston Properties, Inc.
BXP
$87.79 (-2.27%) $-2.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.