Critical Comparison: Resource Capital Corp. (RSO) versus American Assets Trust (AAT)
Resource Capital Corp. (NYSE: RSO) and American Assets Trust (NYSE:AAT) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, institutional ownership and valuation.
This table compares Resource Capital Corp. and American Assets 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%|
|American Assets Trust||9.84%||2.64%||1.42%|
Valuation and Earnings
This table compares Resource Capital Corp. and American Assets Trust’s top-line 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||8.81||-$56.42 million||($1.83)||-5.66|
|American Assets Trust||$298.95 million||6.19||$168.82 million||$0.66||59.53|
American Assets Trust has higher revenue and earnings than Resource Capital Corp.. Resource Capital Corp. is trading at a lower price-to-earnings ratio than American Assets Trust, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Resource Capital Corp. has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, American Assets Trust has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500.
Resource Capital Corp. pays an annual dividend of $0.20 per share and has a dividend yield of 1.9%. American Assets Trust pays an annual dividend of $1.04 per share and has a dividend yield of 2.6%. Resource Capital Corp. pays out -10.9% of its earnings in the form of a dividend. American Assets Trust pays out 157.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Assets Trust has raised its dividend for 2 consecutive years. American Assets Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional & Insider Ownership
45.9% of Resource Capital Corp. shares are owned by institutional investors. Comparatively, 97.8% of American Assets Trust shares are owned by institutional investors. 4.8% of Resource Capital Corp. shares are owned by company insiders. Comparatively, 34.2% of American Assets Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This is a summary of current ratings and recommmendations for Resource Capital Corp. and American Assets Trust, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Resource Capital Corp.||0||2||0||0||2.00|
|American Assets Trust||0||1||1||0||2.50|
Resource Capital Corp. currently has a consensus target price of $10.25, suggesting a potential downside of 0.97%. American Assets Trust has a consensus target price of $47.00, suggesting a potential upside of 19.62%. Given American Assets Trust’s stronger consensus rating and higher possible upside, analysts plainly believe American Assets Trust is more favorable than Resource Capital Corp..
American Assets Trust beats Resource Capital Corp. on 13 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).
American Assets Trust Company Profile
American Assets Trust, Inc. is a full service, vertically integrated and self-administered real estate investment trust (REIT). The Company owns, operates, acquires and develops retail, office, multifamily and mixed-use properties in Southern California, Northern California, Oregon, Washington, Texas and Hawaii markets. The Company operates in four business segments: retail, office, multifamily and mixed-use. As of December 31, 2016, the Company’s portfolio consisted of 11 retail shopping centers; seven office properties; a mixed-use property consisting of a 369-room all-suite hotel and a retail shopping center, and five multifamily properties. Additionally, as of December 31, 2016, the Company owned land at four of its properties that it classified as held for development and construction in progress. The Company’s markets include San Diego, the San Francisco Bay Area, Portland, Oregon, Bellevue, Washington and Oahu, Hawaii.
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