Critical Contrast: Resource Capital Corp. (RSO) and Federal Realty Investment Trust (FRT)
Resource Capital Corp. (NYSE: RSO) and Federal Realty Investment Trust (NYSE:FRT) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, earnings, profitability, analyst recommendations, risk, institutional ownership and valuation.
Resource Capital Corp. pays an annual dividend of $0.20 per share and has a dividend yield of 2.0%. Federal Realty Investment Trust pays an annual dividend of $3.92 per share and has a dividend yield of 3.1%. Resource Capital Corp. pays out -10.9% of its earnings in the form of a dividend. Federal Realty Investment Trust pays out 113.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Resource Capital Corp. has raised its dividend for 49 consecutive years and Federal Realty Investment Trust has raised its dividend for 2 consecutive years.
Volatility and Risk
Resource Capital Corp. has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500. Comparatively, Federal Realty Investment Trust has a beta of 0.29, suggesting that its stock price is 71% less volatile than the S&P 500.
This is a breakdown of recent recommendations and price targets for Resource Capital Corp. and Federal Realty Investment Trust, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Resource Capital Corp.||0||2||0||0||2.00|
|Federal Realty Investment Trust||1||3||6||0||2.50|
Resource Capital Corp. currently has a consensus target price of $10.25, suggesting a potential upside of 0.20%. Federal Realty Investment Trust has a consensus target price of $144.88, suggesting a potential upside of 14.11%. Given Federal Realty Investment Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Federal Realty Investment Trust is more favorable than Resource Capital Corp..
This table compares Resource Capital Corp. and Federal Realty Investment Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Resource Capital Corp.||-48.78%||-6.09%||-2.12%|
|Federal Realty Investment Trust||30.40%||10.91%||4.05%|
Institutional & Insider Ownership
46.4% of Resource Capital Corp. shares are held by institutional investors. Comparatively, 94.6% of Federal Realty Investment Trust shares are held by institutional investors. 4.8% of Resource Capital Corp. shares are held by insiders. Comparatively, 1.1% of Federal Realty Investment Trust shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Valuation & Earnings
This table compares Resource Capital Corp. and Federal Realty Investment Trust’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Resource Capital Corp.||$36.21 million||8.71||-$56.42 million||($1.83)||-5.59|
|Federal Realty Investment Trust||$820.60 million||11.18||$526.36 million||$3.45||36.80|
Federal Realty Investment Trust has higher revenue and earnings than Resource Capital Corp.. Resource Capital Corp. is trading at a lower price-to-earnings ratio than Federal Realty Investment Trust, indicating that it is currently the more affordable of the two stocks.
Federal Realty Investment Trust beats Resource Capital Corp. on 12 of the 16 factors compared between the two stocks.
Resource Capital Corp. Company Profile
Resource Capital Corp. is a real estate finance company. The Company operates through four segments: Commercial Real Estate Debt Investments, Commercial Finance, Residential Mortgage Lending and Corporate & Other. The Commercial Real Estate Debt Investments segment includes the Company’s activities and operations related to commercial real estate loans, commercial real estate-related securities and investments in real estate. The Commercial Finance segment includes the Company’s activities and operations related to syndicated corporate loans, syndicated corporate loan-related securities and direct financing leases. The Residential Mortgage Lending segment includes the Company’s activities and operations related to the investment in residential mortgage-backed securities (RMBS).
Federal Realty Investment Trust Company Profile
Federal Realty Investment Trust is an equity real estate investment trust (REIT). The Company specializes in the ownership, management and redevelopment of retail and mixed-use properties located primarily in affluent communities in selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, as well as in California and South Florida. As of December 31, 2016, the Company owned or had an interest in community and neighborhood shopping centers and mixed-use properties, which operated as 96 retail real estate projects and included approximately 22.6 million square feet. As of December 31, 2016, its 96 retail shopping center and mixed-use properties were located in 12 states and the District of Columbia. As of December 31, 2016, there were approximately 2,900 leases with tenants providing a range of retail products and services. These tenants range from sole proprietorships to national retailers, or corporate group of tenants.
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