Contrasting Federal Realty Investment Trust (FRT) and Resource Capital Corp. (RSO)

Federal Realty Investment Trust (NYSE: FRT) and Resource Capital Corp. (NYSE:RSO) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, risk, earnings and institutional ownership.

Insider and Institutional Ownership

94.6% of Federal Realty Investment Trust shares are held by institutional investors. Comparatively, 46.4% of Resource Capital Corp. shares are held by institutional investors. 1.1% of Federal Realty Investment Trust shares are held by insiders. Comparatively, 4.8% of Resource Capital Corp. shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Federal Realty Investment Trust and Resource Capital Corp., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federal Realty Investment Trust 1 3 6 0 2.50
Resource Capital Corp. 0 2 0 0 2.00

Federal Realty Investment Trust currently has a consensus price target of $144.88, indicating a potential upside of 14.11%. Resource Capital Corp. has a consensus price target of $10.25, indicating a potential upside of 0.20%. Given Federal Realty Investment Trust’s stronger consensus rating and higher possible upside, equities analysts plainly believe Federal Realty Investment Trust is more favorable than Resource Capital Corp..

Risk and Volatility

Federal Realty Investment Trust has a beta of 0.29, indicating that its stock price is 71% less volatile than the S&P 500. Comparatively, Resource Capital Corp. has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.

Valuation and Earnings

This table compares Federal Realty Investment Trust and Resource Capital Corp.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Federal Realty Investment Trust $820.60 million 11.18 $526.36 million $3.45 36.80
Resource Capital Corp. $36.21 million 8.71 -$56.42 million ($1.83) -5.59

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.

Profitability

This table compares Federal Realty Investment Trust and Resource Capital Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federal Realty Investment Trust 30.40% 10.91% 4.05%
Resource Capital Corp. -48.78% -6.09% -2.12%

Dividends

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 an annual dividend of $0.20 per share and has a dividend yield of 2.0%. 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. pays out -10.9% of its earnings in the form of a dividend. Federal Realty Investment Trust has increased its dividend for 49 consecutive years and Resource Capital Corp. has increased its dividend for 2 consecutive years. Federal Realty Investment Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Federal Realty Investment Trust beats Resource Capital Corp. on 13 of the 16 factors compared between the two stocks.

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.

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).

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