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1-Star Stocks Doomed to Drop: Vornado Realty Trust

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

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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


New York, New York

Market Cap

$7.61 billion


Real estate investment trust

TTM Revenue

$3.53 billion


CEO Steven Roth
CFO Joseph Macnow

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

60% and 49.8%


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

CAPS members bearish on VNO also bearish on

Simon Property Group (NYSE:SPG)

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.

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Stocks Mentioned

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

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

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