Resource Capital Corp. (NYSE: RSO) and Alexandria Real Estate Equities (NYSE:ARE) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, profitabiliy, analyst recommendations and institutional ownership.
This is a summary of recent recommendations and price targets for Resource Capital Corp. and Alexandria Real Estate Equities, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Resource Capital Corp.||0||3||0||0||2.00|
|Alexandria Real Estate Equities||0||0||6||0||3.00|
Resource Capital Corp. currently has a consensus price target of $9.92, indicating a potential downside of 2.11%. Alexandria Real Estate Equities has a consensus price target of $122.17, indicating a potential upside of 0.96%. Given Alexandria Real Estate Equities’ stronger consensus rating and higher possible upside, analysts clearly believe Alexandria Real Estate Equities is more favorable than Resource Capital Corp..
Insider & Institutional Ownership
45.4% of Resource Capital Corp. shares are owned by institutional investors. 4.8% of Resource Capital Corp. shares are owned by company insiders. Comparatively, 1.5% of Alexandria Real Estate Equities shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares Resource Capital Corp. and Alexandria Real Estate Equities’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Resource Capital Corp.||-47.84%||-4.90%||-1.65%|
|Alexandria Real Estate Equities||-5.03%||0.22%||0.10%|
Earnings & Valuation
This table compares Resource Capital Corp. and Alexandria Real Estate Equities’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Resource Capital Corp.||$41.69 million||7.48||-$60.37 million||($1.96)||-5.17|
|Alexandria Real Estate Equities||$977.07 million||11.28||$609.38 million||($1.67)||-72.45|
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.
Resource Capital Corp. pays an annual dividend of $0.20 per share and has a dividend yield of 2.0%. 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 out -10.2% of its earnings in the form of a dividend. Alexandria Real Estate Equities pays out -206.0% 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. Resource Capital Corp. has increased its dividend for 2 consecutive years and Alexandria Real Estate Equities has increased its dividend for 6 consecutive years. Alexandria Real Estate Equities is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk & Volatility
Resource Capital Corp. has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500. Comparatively, Alexandria Real Estate Equities has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500.
Alexandria Real Estate Equities beats Resource Capital Corp. on 13 of the 16 factors compared between the two stocks.
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).
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.
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