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

Analyst Recommendations

This is a breakdown of current recommendations for Resource Capital and One Liberty Properties, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Resource Capital 0 3 0 0 2.00
One Liberty Properties 0 3 0 0 2.00

Resource Capital currently has a consensus price target of $11.50, suggesting a potential upside of 33.10%. One Liberty Properties has a consensus price target of $25.25, suggesting a potential upside of 8.79%. Given Resource Capital’s higher possible upside, research analysts clearly believe Resource Capital is more favorable than One Liberty Properties.

Profitability

This table compares Resource Capital and One Liberty 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%
One Liberty Properties 32.44% 8.31% 3.30%

Dividends

Resource Capital pays an annual dividend of $0.20 per share and has a dividend yield of 2.3%. One Liberty Properties pays an annual dividend of $1.80 per share and has a dividend yield of 7.8%. Resource Capital pays out 74.1% of its earnings in the form of a dividend. One Liberty Properties pays out 137.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. One Liberty Properties has raised its dividend for 5 consecutive years. One Liberty Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Resource Capital has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500. Comparatively, One Liberty Properties has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.

Insider and Institutional Ownership

50.9% of Resource Capital shares are held by institutional investors. Comparatively, 40.6% of One Liberty Properties shares are held by institutional investors. 4.8% of Resource Capital shares are held by insiders. Comparatively, 8.6% of One Liberty Properties shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Resource Capital and One Liberty 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 4.33 -$30.36 million $0.27 32.00
One Liberty Properties $70.59 million 6.25 $24.42 million $1.31 17.72

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

Summary

One Liberty Properties beats Resource Capital on 9 of the 15 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).

One Liberty Properties Company Profile

One Liberty Properties, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company acquires, owns and manages a geographically diversified portfolio consisting of retail, industrial, flex, and health and fitness properties. As of December 31, 2016, the Company owned 114 properties and participated in joint ventures that own five properties. These 119 properties are located in 30 states and have an aggregate of approximately 10.1 million square feet (including an aggregate of approximately 1.2 million square feet at properties owned by its joint ventures). As of December 31, 2016, the Company’s property locations included Fort Mill, South Carolina; Royersford, Pennsylvania; Round Rock, Texas; W.Hartford, Connecticut; Delport, Missouri; Brooklyn, New York City; Lakemoor, Illinois; Tucker, Georgia; Cedar Park, Texas; Lake Charles, Louisiana; Sandy Springs, Georgia; Wichita, Kansas; Melville, New York; Ronkonkoma, New York, and Niles, Illinois.

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