First Potomac Realty Trust (FPO) & Resource Capital (RSO) Head to Head Analysis

First Potomac Realty Trust (NYSE: FPO) and Resource Capital (NYSE:RSO) are both small-cap financials companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, valuation, earnings, analyst recommendations and risk.

Dividends

First Potomac Realty Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. Resource Capital pays an annual dividend of $0.20 per share and has a dividend yield of 2.3%. First Potomac Realty Trust pays out 58.0% of its earnings in the form of a dividend. Resource Capital pays out 16.1% 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.

Earnings & Valuation

This table compares First Potomac Realty Trust and Resource Capital’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Potomac Realty Trust N/A N/A N/A $0.69 16.14
Resource Capital $62.68 million 4.44 -$30.36 million $1.24 7.15

First Potomac Realty Trust has higher earnings, but lower revenue than Resource Capital. Resource Capital is trading at a lower price-to-earnings ratio than First Potomac Realty Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares First Potomac Realty Trust and Resource Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Potomac Realty Trust -7.99% -2.35% -0.94%
Resource Capital 63.00% -1.23% -0.44%

Volatility & Risk

First Potomac Realty Trust has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500. Comparatively, Resource Capital has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500.

Institutional and Insider Ownership

93.1% of First Potomac Realty Trust shares are owned by institutional investors. Comparatively, 50.8% of Resource Capital shares are owned by institutional investors. 2.1% of First Potomac Realty Trust shares are owned by insiders. Comparatively, 4.8% of Resource Capital shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for First Potomac Realty Trust and Resource Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Potomac Realty Trust 2 1 1 0 1.75
Resource Capital 0 3 0 0 2.00

First Potomac Realty Trust presently has a consensus target price of $11.29, indicating a potential upside of 1.32%. Resource Capital has a consensus target price of $11.50, indicating a potential upside of 29.80%. Given Resource Capital’s stronger consensus rating and higher possible upside, analysts clearly believe Resource Capital is more favorable than First Potomac Realty Trust.

Summary

Resource Capital beats First Potomac Realty Trust on 10 of the 14 factors compared between the two stocks.

About First Potomac Realty Trust

First Potomac Realty Trust (First Potomac) is engaged in ownership, management, redevelopment and development of office and business park properties in the greater Washington, D.C. region. The Company’s segments include Washington, D.C., Maryland, Northern Virginia and Southern Virginia. The Company conducts its business through First Potomac Realty Investment Limited Partnership, its operating partnership. The Company’s portfolio consist a mix of single-tenant and multi-tenant office properties, and business parks. The office properties are single-story and multi-story buildings that are primarily for office uses, and business parks consists of buildings with office features combined with some industrial property space. As of December 31, 2016, the Company owned properties totaling 6.7 million square feet and had a non-controlling ownership interest in properties totaling an additional 0.9 million square feet through five unconsolidated joint ventures.

About Resource Capital

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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