Alexandria Real Estate Equities (NYSE: ARE) and Resource Capital Corp. (NYSE:RSO) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, profitabiliy, dividends, earnings, institutional ownership and risk.
Risk and Volatility
Alexandria Real Estate Equities has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500. Comparatively, Resource Capital Corp. has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500.
Alexandria Real Estate Equities pays an annual dividend of $3.44 per share and has a dividend yield of 2.8%. Resource Capital Corp. pays an annual dividend of $0.20 per share and has a dividend yield of 2.1%. Alexandria Real Estate Equities pays out -206.0% of its earnings in the form of a dividend. Resource Capital Corp. pays out -10.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Alexandria Real Estate Equities has increased its dividend for 2 consecutive years and Resource Capital Corp. has increased its dividend for 6 consecutive years. Alexandria Real Estate Equities is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Alexandria Real Estate Equities and Resource Capital Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alexandria Real Estate Equities||-5.03%||0.22%||0.10%|
|Resource Capital Corp.||-47.84%||-4.90%||-1.65%|
Earnings and Valuation
This table compares Alexandria Real Estate Equities and Resource Capital Corp.’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Alexandria Real Estate Equities||$977.07 million||11.38||$609.38 million||($1.67)||-73.11|
|Resource Capital Corp.||$41.69 million||7.04||-$60.37 million||($1.96)||-4.86|
Alexandria Real Estate Equities has higher revenue and earnings than Resource Capital Corp.. Alexandria Real Estate Equities is trading at a lower price-to-earnings ratio than Resource Capital Corp., indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
45.4% of Resource Capital Corp. shares are owned by institutional investors. 1.5% of Alexandria Real Estate Equities shares are owned by insiders. Comparatively, 4.8% of Resource Capital Corp. shares are owned 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.
This is a breakdown of current ratings for Alexandria Real Estate Equities and Resource Capital Corp., as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alexandria Real Estate Equities||0||0||6||0||3.00|
|Resource Capital Corp.||0||3||0||0||2.00|
Alexandria Real Estate Equities presently has a consensus target price of $122.17, indicating a potential upside of 0.06%. Resource Capital Corp. has a consensus target price of $9.92, indicating a potential upside of 4.06%. Given Resource Capital Corp.’s higher probable upside, analysts plainly believe Resource Capital Corp. is more favorable than Alexandria Real Estate Equities.
Alexandria Real Estate Equities beats Resource Capital Corp. on 11 of the 16 factors compared between the two stocks.
About Alexandria Real Estate Equities
Alexandria Real Estate Equities, Inc. is a real estate investment (REIT). The Company is engaged in the business of providing space for lease to the life science and technology industries. It focuses on collaborative life science and technology campuses. It develops urban cluster campuses and ecosystems. As of December 31, 2016, the Company had 199 properties in North America. As of December 31, 2016, its asset base in North America consisted of 25.2 million square feet, including 19.9 million rentable square feet/foot (RSF) of operating properties, and development and redevelopment of under construction or pre-construction, as well as 5.3 million square feet of future ground-up development projects. Its properties are located in various areas, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland and Research Triangle Park. Its properties include Alexandria Technology Square, Alexandria Park at 128 and Alexandria Technology Center-Gateway.
About Resource Capital Corp.
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).
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