Resource Capital (NYSE: RSO) and Government Properties Income Trust (NASDAQ:GOV) are both small-cap financials companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, profitability, risk, earnings, institutional ownership, analyst recommendations and dividends.
Insider and Institutional Ownership
50.9% of Resource Capital shares are owned by institutional investors. Comparatively, 58.4% of Government Properties Income Trust shares are owned by institutional investors. 4.8% of Resource Capital shares are owned by company insiders. Comparatively, 2.7% of Government Properties Income Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
This table compares Resource Capital and Government Properties Income Trust’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Resource Capital||$62.68 million||4.49||-$30.36 million||$1.24||7.23|
|Government Properties Income Trust||$258.18 million||6.24||$57.84 million||$0.55||29.56|
Government Properties Income Trust has higher revenue and earnings than Resource Capital. Resource Capital is trading at a lower price-to-earnings ratio than Government Properties Income Trust, indicating that it is currently the more affordable of the two stocks.
This table compares Resource Capital and Government Properties Income Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Government Properties Income Trust||15.30%||4.27%||1.66%|
Resource Capital pays an annual dividend of $0.20 per share and has a dividend yield of 2.2%. Government Properties Income Trust pays an annual dividend of $1.72 per share and has a dividend yield of 10.6%. Resource Capital pays out 16.1% of its earnings in the form of a dividend. Government Properties Income Trust pays out 312.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Volatility and Risk
Resource Capital has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500. Comparatively, Government Properties Income Trust has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500.
This is a summary of recent ratings and target prices for Resource Capital and Government Properties Income Trust, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Government Properties Income Trust||2||1||2||0||2.00|
Resource Capital presently has a consensus price target of $11.50, indicating a potential upside of 28.21%. Government Properties Income Trust has a consensus price target of $18.75, indicating a potential upside of 15.31%. Given Resource Capital’s higher possible upside, analysts clearly believe Resource Capital is more favorable than Government Properties Income Trust.
Government Properties Income Trust beats Resource Capital on 9 of the 15 factors compared between the two stocks.
Resource Capital 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).
Government Properties Income Trust Company Profile
Government Properties Income Trust is a real estate investment trust (REIT). The Company operates through two segments: ownership of properties that are primarily leased to government tenants and its equity method investment in Select Income REIT (SIR). The Company’s properties are located in areas, including Alabama, Arizona, California, Colorado, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey and New Mexico. As of December 31, 2016, the Company owned 73 properties (95 buildings). As of December 31, 2016, the Company’s properties were located in 31 states and the District of Columbia, and contained approximately 11.4 million rentable square feet.
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