Easterly Government Properties (NYSE: DEA) and RAIT Financial Trust (NYSE:RAS) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, analyst recommendations, profitabiliy, earnings, dividends and risk.

Analyst Recommendations

This is a summary of current ratings for Easterly Government Properties and RAIT Financial Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Easterly Government Properties 0 1 2 0 2.67
RAIT Financial Trust 0 2 1 0 2.33

Easterly Government Properties currently has a consensus price target of $21.83, suggesting a potential upside of 8.68%. RAIT Financial Trust has a consensus price target of $3.25, suggesting a potential upside of 88.95%. Given RAIT Financial Trust’s higher probable upside, analysts clearly believe RAIT Financial Trust is more favorable than Easterly Government Properties.

Valuation & Earnings

This table compares Easterly Government Properties and RAIT Financial Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Easterly Government Properties $110.53 million 6.72 $56.71 million $0.10 200.92
RAIT Financial Trust $96.55 million 1.65 -$22.25 million ($0.24) -7.17

Easterly Government Properties has higher revenue and earnings than RAIT Financial Trust. RAIT Financial Trust is trading at a lower price-to-earnings ratio than Easterly Government Properties, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Easterly Government Properties has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500. Comparatively, RAIT Financial Trust has a beta of 1.58, suggesting that its share price is 58% more volatile than the S&P 500.

Insider & Institutional Ownership

91.9% of Easterly Government Properties shares are owned by institutional investors. Comparatively, 60.3% of RAIT Financial Trust shares are owned by institutional investors. 18.1% of Easterly Government Properties shares are owned by insiders. Comparatively, 1.3% of RAIT Financial Trust shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Easterly Government Properties and RAIT Financial Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Easterly Government Properties 3.46% 0.56% 0.37%
RAIT Financial Trust 11.06% 3.41% 0.58%

Dividends

Easterly Government Properties pays an annual dividend of $1.00 per share and has a dividend yield of 5.0%. RAIT Financial Trust pays an annual dividend of $0.36 per share and has a dividend yield of 20.9%. Easterly Government Properties pays out 1,000.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RAIT Financial Trust pays out -150.0% of its earnings in the form of a dividend. RAIT Financial Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Easterly Government Properties beats RAIT Financial Trust on 8 of the 15 factors compared between the two stocks.

Easterly Government Properties Company Profile

Easterly Government Properties, Inc. is an internally managed real estate investment trust (REIT). The Company focuses on the acquisition, development and management of Class A commercial properties that are leased to the United States Government agencies. The Company leases its properties to such agencies through the United States General Services Administration (GSA). The operations of the Company are carried on primarily through Easterly Government Properties, LP and the subsidiaries of the Operating Partnership. As of December 31, 2016, it had 43 operating properties in the United States, including 40 operating properties that are leased primarily to the United States Government tenant agencies and three operating properties that are entirely leased to private tenants, encompassing approximately 3.1 million square feet in the aggregate. In addition, the Company had one property under development encompassing approximately 0.1 million square feet as of December 31, 2016.

RAIT Financial Trust Company Profile

RAIT Financial Trust (RAIT) is a real estate investment trust (REIT). The Company focuses on providing commercial real estate (CRE) financing throughout the United States. The core of its business is a full service CRE lending platform focused on first lien loans. It offers customized lending solutions to meet borrower needs and internal credit goals. It offers personalized middle-market financing solutions and a complement of lending products for CRE. The Company may also offer mezzanine loans and preferred equity interests in limited circumstances to support first lien loans. It is engaged in floating rate securitization programs and has access to multiple sources of funding, including senior debt, convertible securities, preferred securities and common securities. The Company also owns and manages a portfolio of CRE properties, and manages real estate assets for third parties. The Company is engaged in lending, owning and managing CRE assets throughout the United States.

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