Contrasting Stratus Properties (NASDAQ:STRS) & Forestar Group (NYSE:FOR)

Forestar Group (NYSE:FOR) and Stratus Properties (NASDAQ:STRS) are both small-cap real estate companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, profitability, risk and earnings.

Earnings & Valuation

This table compares Forestar Group and Stratus Properties”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Forestar Group	$1.66 billion	0.75	$167.90 million	$2.78	8.81
Stratus Properties	$28.66 million	4.75	$11.98 million	$2.64	6.44

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Forestar Group and Stratus Properties, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Forestar Group	0	4	2	0	2.33
Stratus Properties	1	0	0	0	1.00

Forestar Group currently has a consensus price target of $32.67, suggesting a potential upside of 33.31%. Given Forestar Group’s stronger consensus rating and higher possible upside, analysts plainly believe Forestar Group is more favorable than Stratus Properties.

Volatility & Risk

Forestar Group has a beta of 1.4, indicating that its stock price is 40% more volatile than the S&P 500. Comparatively, Stratus Properties has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Profitability

This table compares Forestar Group and Stratus Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Forestar Group	9.88%	9.42%	5.36%
Stratus Properties	74.96%	6.28%	3.83%

Insider and Institutional Ownership

35.5% of Forestar Group shares are held by institutional investors. Comparatively, 61.6% of Stratus Properties shares are held by institutional investors. 0.5% of Forestar Group shares are held by insiders. Comparatively, 10.0% of Stratus Properties shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Forestar Group beats Stratus Properties on 10 of the 14 factors compared between the two stocks.

About Forestar Group

Forestar Group Inc. operates as a residential lot development company in the United States. The company acquires land and develops infrastructure for single-family residential communities. It sells its residential single-family finished lots to local, regional, and national homebuilders. The company was incorporated in 2005 and is headquartered in Arlington, Texas. Forestar Group Inc. operates as a subsidiary of D.R. Horton, Inc.

About Stratus Properties

Stratus Properties Inc., a real estate company, engages in the entitlement, development, management, leasing, and sale of multi and single family residential and commercial real estate properties in the Austin, Texas area and other select markets in Texas. The company operates in two segments, Real Estate Operations and Leasing Operations. Its leasing operations cover lease of space at retail and mixed-use and multi-family properties. The company was incorporated in 1992 and is headquartered in Austin, Texas.