The RMR Group (NASDAQ:RMR) vs. TPG RE Finance Trust (NYSE:TRTX) Critical Review

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

Profitability

This table compares The RMR Group and TPG RE Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The RMR Group	3.23%	3.44%	2.05%
TPG RE Finance Trust	19.38%	6.91%	1.74%

Analyst Ratings

This is a summary of current ratings and target prices for The RMR Group and TPG RE Finance Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The RMR Group	0	2	2	0	2.50
TPG RE Finance Trust	0	2	4	0	2.67

The RMR Group presently has a consensus price target of $19.00, suggesting a potential downside of 5.99%. TPG RE Finance Trust has a consensus price target of $9.83, suggesting a potential upside of 18.55%. Given TPG RE Finance Trust’s stronger consensus rating and higher possible upside, analysts plainly believe TPG RE Finance Trust is more favorable than The RMR Group.

Earnings and Valuation

This table compares The RMR Group and TPG RE Finance Trust”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The RMR Group	$700.28 million	0.93	$17.60 million	$1.21	16.70
TPG RE Finance Trust	$332.58 million	1.93	$60.32 million	$0.63	13.17

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

Institutional and Insider Ownership

42.3% of The RMR Group shares are held by institutional investors. Comparatively, 57.1% of TPG RE Finance Trust shares are held by institutional investors. 54.7% of The RMR Group shares are held by insiders. Comparatively, 3.0% of TPG RE Finance Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

The RMR Group has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, TPG RE Finance Trust has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500.

Dividends

The RMR Group pays an annual dividend of $1.80 per share and has a dividend yield of 8.9%. TPG RE Finance Trust pays an annual dividend of $0.96 per share and has a dividend yield of 11.6%. The RMR Group pays out 148.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TPG RE Finance Trust pays out 152.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. The RMR Group has increased its dividend for 1 consecutive years.

Summary

TPG RE Finance Trust beats The RMR Group on 10 of the 17 factors compared between the two stocks.

About The RMR Group

The RMR Group Inc., through its subsidiary, The RMR Group LLC, provides asset management services in the United States. The company offers management services to its four publicly traded real estate investment trusts, three real estate operating companies, and private capital vehicles. It also provides advisory services to publicly traded mortgage real estate investment trust. The company was formerly known as REIT Management & Research Inc. and changed its name to The RMR Group Inc. in October 2015. The RMR Group Inc. was founded in 1986 and is headquartered in Newton, Massachusetts.

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.