Head-To-Head Comparison: Resource Capital (RSO) versus Brookfield Canada Office Properties (BOXC)

Resource Capital (NYSE: RSO) and Brookfield Canada Office Properties (NYSE:BOXC) are both small-cap financials companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Valuation and Earnings

This table compares Resource Capital and Brookfield Canada Office Properties’ gross 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 4.70 -$30.36 million $1.24 7.57
Brookfield Canada Office Properties N/A N/A N/A $1.16 21.52

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

Profitability

This table compares Resource Capital and Brookfield Canada Office Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Resource Capital 63.00% -1.23% -0.44%
Brookfield Canada Office Properties 7.64% 1.26% 0.65%

Dividends

Resource Capital pays an annual dividend of $0.20 per share and has a dividend yield of 2.1%. Brookfield Canada Office Properties pays an annual dividend of $0.97 per share and has a dividend yield of 3.9%. Resource Capital pays out 16.1% of its earnings in the form of a dividend. Brookfield Canada Office Properties pays out 83.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Brookfield Canada Office Properties has increased its dividend for 2 consecutive years. Brookfield Canada Office Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

50.2% of Resource Capital shares are held by institutional investors. Comparatively, 20.1% of Brookfield Canada Office Properties shares are held by institutional investors. 4.8% of Resource Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Resource Capital and Brookfield Canada Office Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Resource Capital 0 3 0 0 2.00
Brookfield Canada Office Properties 0 1 0 0 2.00

Resource Capital presently has a consensus price target of $11.50, indicating a potential upside of 22.47%. Given Resource Capital’s higher probable upside, analysts clearly believe Resource Capital is more favorable than Brookfield Canada Office Properties.

Volatility & Risk

Resource Capital has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500. Comparatively, Brookfield Canada Office Properties has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500.

Summary

Resource Capital beats Brookfield Canada Office Properties on 8 of the 13 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).

Brookfield Canada Office Properties Company Profile

Brookfield Canada Office Properties is a Canada-based real estate investment trust (REIT). The Company invests, develops and operates commercial office properties in Toronto, Ottawa, Calgary and Vancouver. The Company’s commercial-property portfolio consists of interests in approximately 25 properties totaling approximately 21.1 million square feet, including approximately 4.0 million square feet of parking and other. The Company’s development portfolio consists of the Brookfield Place Calgary East development site totaling approximately 1.4 million square feet in Calgary. The Company also invests in ongoing maintenance and capital improvement projects. The Company focuses on the markets, which include financial, government and energy sectors, which are primarily located in the cities of Toronto and Calgary. Its properties include 2 Queen Street East, Queen’s Quay Terminal, Exchange Tower, Bankers Hall Retail, Suncor Energy Centre, Jean Edmonds Tower and Royal Centre.

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