Critical Contrast: Resource Capital (RSO) versus New York REIT (NYRT)

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

Earnings & Valuation

This table compares Resource Capital and New York REIT’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Resource Capital $62.68 million 4.82 -$30.36 million $0.27 35.63
New York REIT $160.27 million 4.37 -$82.52 million ($0.50) -8.34

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

Dividends

Resource Capital pays an annual dividend of $0.20 per share and has a dividend yield of 2.1%. New York REIT does not pay a dividend. Resource Capital pays out 74.1% of its earnings in the form of a dividend. Resource Capital has increased its dividend for 3 consecutive years.

Profitability

This table compares Resource Capital and New York REIT’s 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%
New York REIT N/A -1.95% -0.86%

Insider & Institutional Ownership

50.2% of Resource Capital shares are held by institutional investors. Comparatively, 70.0% of New York REIT shares are held by institutional investors. 4.8% of Resource Capital shares are held by company insiders. Comparatively, 0.1% of New York REIT shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Resource Capital has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, New York REIT has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Resource Capital and New York REIT, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Resource Capital 0 3 0 0 2.00
New York REIT 0 1 1 0 2.50

Resource Capital currently has a consensus price target of $11.50, indicating a potential upside of 19.54%. New York REIT has a consensus price target of $8.38, indicating a potential upside of 100.84%. Given New York REIT’s stronger consensus rating and higher probable upside, analysts plainly believe New York REIT is more favorable than Resource Capital.

Summary

Resource Capital beats New York REIT on 11 of the 17 factors compared between the two stocks.

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).

About New York REIT

New York REIT, Inc. is a real estate investment trust. The Company owns a portfolio of commercial real estate. The Company’s business is primarily conducted through New York Recovery Operating Partnership, L.P. As of December 31, 2016, the Company owned 19 properties, which aggregated 3.3 million rentable square feet. The Company holds interests in properties of various types, such as office, retail, hotel, parking and storage. The Company’s properties include Design Center, 416 Washington Street, 50 Varick Street, 1440 Broadway, One Worldwide Plaza, 256 West 38th Street, 229 West 36th Street, 333 West 34th Street, 367-387 Bleecker Street, 33 West 56th Street (garage) and 350 West 42nd Street.

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