One Liberty Properties (OLP) and Resource Capital (RSO) Critical Review

One Liberty Properties (NYSE: OLP) and Resource Capital (NYSE:RSO) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Insider & Institutional Ownership

40.6% of One Liberty Properties shares are held by institutional investors. Comparatively, 50.9% of Resource Capital shares are held by institutional investors. 8.6% of One Liberty Properties shares are held by company insiders. Comparatively, 4.8% of Resource Capital shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations and price targets for One Liberty Properties and Resource Capital, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
One Liberty Properties 0 3 0 0 2.00
Resource Capital 0 3 0 0 2.00

One Liberty Properties presently has a consensus price target of $25.25, suggesting a potential upside of 10.07%. Resource Capital has a consensus price target of $11.50, suggesting a potential upside of 31.13%. Given Resource Capital’s higher probable upside, analysts clearly believe Resource Capital is more favorable than One Liberty Properties.

Profitability

This table compares One Liberty Properties and Resource Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
One Liberty Properties 32.44% 8.31% 3.30%
Resource Capital 63.00% -1.23% -0.44%

Valuation and Earnings

This table compares One Liberty Properties and Resource Capital’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
One Liberty Properties $70.59 million 6.17 $24.42 million $1.31 17.51
Resource Capital $62.68 million 4.39 -$30.36 million $1.24 7.07

One Liberty Properties has higher revenue and earnings than Resource Capital. Resource Capital is trading at a lower price-to-earnings ratio than One Liberty Properties, indicating that it is currently the more affordable of the two stocks.

Dividends

One Liberty Properties pays an annual dividend of $1.80 per share and has a dividend yield of 7.8%. Resource Capital pays an annual dividend of $0.20 per share and has a dividend yield of 2.3%. One Liberty Properties pays out 137.4% 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 pays out 16.1% of its earnings in the form of a dividend. Resource Capital has raised its dividend for 5 consecutive years.

Volatility & Risk

One Liberty Properties has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500. Comparatively, Resource Capital has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500.

Summary

One Liberty Properties beats Resource Capital on 9 of the 15 factors compared between the two stocks.

One Liberty Properties Company Profile

One Liberty Properties, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company acquires, owns and manages a geographically diversified portfolio consisting of retail, industrial, flex, and health and fitness properties. As of December 31, 2016, the Company owned 114 properties and participated in joint ventures that own five properties. These 119 properties are located in 30 states and have an aggregate of approximately 10.1 million square feet (including an aggregate of approximately 1.2 million square feet at properties owned by its joint ventures). As of December 31, 2016, the Company’s property locations included Fort Mill, South Carolina; Royersford, Pennsylvania; Round Rock, Texas; W.Hartford, Connecticut; Delport, Missouri; Brooklyn, New York City; Lakemoor, Illinois; Tucker, Georgia; Cedar Park, Texas; Lake Charles, Louisiana; Sandy Springs, Georgia; Wichita, Kansas; Melville, New York; Ronkonkoma, New York, and Niles, Illinois.

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).

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