Critical Review: HFF (HF) and Its Peers

HFF (NYSE: HF) is one of 25 public companies in the “Real Estate Services” industry, but how does it contrast to its peers? We will compare HFF to related companies based on the strength of its risk, earnings, institutional ownership, dividends, valuation, analyst recommendations and profitability.

Profitability

This table compares HFF and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HFF 15.51% 40.20% 8.06%
HFF Competitors 4.57% 14.43% 3.06%

Risk & Volatility

HFF has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500. Comparatively, HFF’s peers have a beta of 1.57, meaning that their average share price is 57% more volatile than the S&P 500.

Valuation & Earnings

This table compares HFF and its peers top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
HFF $542.82 million N/A 18.47
HFF Competitors $1.67 billion $167.91 million 34.63

HFF’s peers have higher revenue and earnings than HFF. HFF is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Insider & Institutional Ownership

87.1% of HFF shares are owned by institutional investors. Comparatively, 67.0% of shares of all “Real Estate Services” companies are owned by institutional investors. 5.7% of HFF shares are owned by insiders. Comparatively, 12.4% of shares of all “Real Estate Services” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for HFF and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HFF 1 2 1 0 2.00
HFF Competitors 74 318 642 9 2.56

HFF currently has a consensus target price of $28.00, suggesting a potential downside of 31.09%. As a group, “Real Estate Services” companies have a potential upside of 7.64%. Given HFF’s peers stronger consensus rating and higher possible upside, analysts clearly believe HFF has less favorable growth aspects than its peers.

Summary

HFF peers beat HFF on 8 of the 12 factors compared.

About HFF

HFF, Inc. is a holding company. The Company holds the partnership interests in Holliday Fenoglio Fowler, L.P. and HFF Securities L.P. (together, the Operating Partnerships), held through the subsidiary HFF Partnership Holdings, LLC, and all of the outstanding shares of Holliday GP Corp. (Holliday GP). The Company operates through the commercial real estate financial intermediary segment. It offers debt placement, investment sales, distressed debt and real estate owned advisory services, equity placement, investment banking and advisory services, loan sales and commercial loan servicing. Its fully-integrated national capital markets platform, coupled with its knowledge of the commercial real estate markets provides an range of capital markets services, including Debt placement; Investment sales; Distressed debt and real estate owned advisory services; Equity placement; Investment banking and advisory services; Loan sales; and Commercial loan servicing.

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