Critical Contrast: TPG RE Finance Trust (NYSE:TRTX) versus Legacy Housing (NASDAQ:LEGH)

Legacy Housing (NASDAQ:LEGH) and TPG RE Finance Trust (NYSE:TRTX) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, earnings, profitability and risk.

Analyst Ratings

This is a breakdown of recent recommendations for Legacy Housing and TPG RE Finance Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Legacy Housing	0	3	0	1	2.50
TPG RE Finance Trust	0	2	4	0	2.67

Legacy Housing presently has a consensus price target of $21.00, suggesting a potential downside of 20.39%. TPG RE Finance Trust has a consensus price target of $9.83, suggesting a potential upside of 17.13%. Given TPG RE Finance Trust’s stronger consensus rating and higher probable upside, analysts clearly believe TPG RE Finance Trust is more favorable than Legacy Housing.

Earnings & Valuation

This table compares Legacy Housing and TPG RE Finance Trust”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Legacy Housing	$164.57 million	3.81	$41.81 million	$1.78	14.82
TPG RE Finance Trust	$332.58 million	1.95	$60.32 million	$0.63	13.33

TPG RE Finance Trust has higher revenue and earnings than Legacy Housing. TPG RE Finance Trust is trading at a lower price-to-earnings ratio than Legacy Housing, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Legacy Housing and TPG RE Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Legacy Housing	26.01%	8.08%	7.44%
TPG RE Finance Trust	19.38%	6.91%	1.74%

Volatility and Risk

Legacy Housing has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500. Comparatively, TPG RE Finance Trust has a beta of 1.4, meaning that its share price is 40% more volatile than the S&P 500.

Institutional & Insider Ownership

89.3% of Legacy Housing shares are held by institutional investors. Comparatively, 57.1% of TPG RE Finance Trust shares are held by institutional investors. 30.1% of Legacy Housing shares are held by company insiders. Comparatively, 3.0% of TPG RE Finance Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Legacy Housing beats TPG RE Finance Trust on 9 of the 15 factors compared between the two stocks.

About Legacy Housing

Legacy Housing Corporation engages in the building, sale, and financing of manufactured homes and tiny houses primarily in the southern United States. It manufactures and provides for the transport of mobile homes, including 1 to 5 bedrooms with 1 to 3 1/2 bathrooms; and provides wholesale financing to dealers and mobile home parks, as well as retail financing to consumers. The company also offers inventory financing for its independent retailers; consumer financing for its products; and financing to manufactured housing community owners that buy or lease its products for use in their rental housing communities. In addition, it involved in financing and developing new manufactured home communities. The company markets its homes under the Legacy brand through a network of independent retailers and company-owned stores; and directly to manufactured home communities. Legacy Housing Corporation was founded in 2005 and is headquartered in Bedford, Texas.

About TPG RE Finance Trust

TPG RE Finance Trust, Inc., a commercial real estate finance company, originates, acquires, and manages commercial mortgage loans and other commercial real estate-related debt instruments in the United States. It invests in commercial mortgage loans; subordinate mortgage interests, mezzanine loans, secured real estate securities, note financing, preferred equity, and miscellaneous debt instruments; and commercial real estate collateralized loan obligations and commercial mortgage-backed securities secured by properties primarily in the multifamily, life science, mixed-use, hospitality, self storage, industrial, and retail real estate sectors. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. TPG RE Finance Trust, Inc. was incorporated in 2014 and is based in New York, New York.