Financial Review: Marcus & Millichap (NYSE:MMI) versus LRR Energy (NASDAQ:LRE)

Marcus & Millichap (NYSE:MMI) and LRR Energy (NASDAQ:LRE) are both small-cap real estate companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, valuation, risk, analyst recommendations and dividends.

Institutional & Insider Ownership

62.8% of Marcus & Millichap shares are held by institutional investors. 39.9% of Marcus & Millichap shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Marcus & Millichap has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500. Comparatively, LRR Energy has a beta of 1.43, suggesting that its share price is 43% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Marcus & Millichap and LRR Energy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Marcus & Millichap	1	1	0	0	1.50
LRR Energy	1	0	0	0	1.00

Marcus & Millichap currently has a consensus target price of $28.00, suggesting a potential downside of 10.41%. Given Marcus & Millichap’s stronger consensus rating and higher probable upside, research analysts plainly believe Marcus & Millichap is more favorable than LRR Energy.

Profitability

This table compares Marcus & Millichap and LRR Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Marcus & Millichap	1.77%	2.97%	2.21%
LRR Energy	N/A	N/A	N/A

Dividends

Marcus & Millichap pays an annual dividend of $0.50 per share and has a dividend yield of 1.6%. LRR Energy pays an annual dividend of $0.04 per share and has a dividend yield of 3.1%. Marcus & Millichap pays out 135.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares Marcus & Millichap and LRR Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Marcus & Millichap	$755.16 million	1.57	-$1.91 million	$0.37	84.47
LRR Energy	$17.80 billion	0.00	$5.67 million	N/A	N/A

LRR Energy has higher revenue and earnings than Marcus & Millichap.

Summary

Marcus & Millichap beats LRR Energy on 8 of the 13 factors compared between the two stocks.

About Marcus & Millichap

Marcus & Millichap, Inc. engages in the provision of investment real estate brokerage services. It specializes in commercial real estate investment sales, property financing, research, and advisory services. The company was founded by George M. Marcus and William A. Millichap in 1971 and is headquartered in Calabasas, CA.

About LRR Energy

LRR Energy, L.P. (LRR Energy) operates, acquires, exploits and develops producing oil and natural gas properties in North America. The Company’s properties consist of onshore oil and natural gas properties. Its oil and natural gas properties include the Permian Basin region in West Texas and Southeast New Mexico, the Mid-Continent region in Oklahoma and East Texas, and the Gulf Coast region in Texas. As of December 31, 2014, the Company’s total estimated proved reserves were approximately 33.8 million barrels of oil equivalent (MMBoe), of which approximately 88% were proved developed reserves (approximately 73% proved developed producing and approximately 15% proved developed non-producing). The Company’s general partner is LRE GP, LLC.