RAIT Financial Trust (NYSE: RAS) and NRF Holdco (NYSE:NRF) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, earnings, risk, valuation, institutional ownership and profitability.

Volatility and Risk

RAIT Financial Trust has a beta of 1.63, suggesting that its stock price is 63% more volatile than the S&P 500. Comparatively, NRF Holdco has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500.

Institutional & Insider Ownership

59.9% of RAIT Financial Trust shares are owned by institutional investors. Comparatively, 69.7% of NRF Holdco shares are owned by institutional investors. 1.3% of RAIT Financial Trust shares are owned by company insiders. Comparatively, 2.4% of NRF Holdco shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

RAIT Financial Trust pays an annual dividend of $0.20 per share and has a dividend yield of 30.8%. NRF Holdco pays an annual dividend of $1.60 per share and has a dividend yield of 9.9%. RAIT Financial Trust pays out -13.0% of its earnings in the form of a dividend. NRF Holdco pays out -67.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares RAIT Financial Trust and NRF Holdco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RAIT Financial Trust -99.46% 0.98% 0.15%
NRF Holdco -16.61% -17.86% -2.44%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for RAIT Financial Trust and NRF Holdco, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RAIT Financial Trust 1 2 0 0 1.67
NRF Holdco 0 1 1 0 2.50

RAIT Financial Trust currently has a consensus price target of $1.43, indicating a potential upside of 119.20%. NRF Holdco has a consensus price target of $16.00, indicating a potential downside of 0.81%. Given RAIT Financial Trust’s higher probable upside, research analysts clearly believe RAIT Financial Trust is more favorable than NRF Holdco.

Valuation and Earnings

This table compares RAIT Financial Trust and NRF Holdco’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
RAIT Financial Trust $58.82 million 1.03 -$143.38 million ($1.54) -0.42
NRF Holdco N/A N/A N/A ($2.38) -6.78

NRF Holdco has higher revenue, but lower earnings than RAIT Financial Trust. NRF Holdco is trading at a lower price-to-earnings ratio than RAIT Financial Trust, indicating that it is currently the more affordable of the two stocks.

Summary

NRF Holdco beats RAIT Financial Trust on 7 of the 13 factors compared between the two stocks.

RAIT Financial Trust Company Profile

RAIT Financial Trust (RAIT) is a real estate investment trust (REIT). The Company focuses on providing commercial real estate (CRE) financing throughout the United States. The core of its business is a full service CRE lending platform focused on first lien loans. It offers customized lending solutions to meet borrower needs and internal credit goals. It offers personalized middle-market financing solutions and a complement of lending products for CRE. The Company may also offer mezzanine loans and preferred equity interests in limited circumstances to support first lien loans. It is engaged in floating rate securitization programs and has access to multiple sources of funding, including senior debt, convertible securities, preferred securities and common securities. The Company also owns and manages a portfolio of CRE properties, and manages real estate assets for third parties. The Company is engaged in lending, owning and managing CRE assets throughout the United States.

NRF Holdco Company Profile

NRF Holdco LLC. is a commercial real estate company. The Company invests in multiple asset classes across commercial real estate (CRE). Its portfolio consists of healthcare, hotel, manufactured housing communities, net lease and multifamily properties. The Company also invests in other opportunistic real estate investments, such as indirect interests in real estate through its investments in private equity funds (PE Investments). The Company also acquires and operates hotel and certain healthcare properties. The Company’s segments include Real Estate, Commercial Real Estate Debt (CRE debt), Commercial Real Estate Securities, N-Star CDOs and Corporate. Its real estate equity investments that operate under the REIT Investment Diversification and Empowerment Act (RIDEA) structure generate resident and hotel guest related income from short-term residential agreements. The Company is externally managed and advised by an affiliate of NorthStar Asset Management Group Inc.

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