Head-To-Head Comparison: Federal Realty Investment Trust (NYSE:FRT) and Ready Capital (NYSE:RC)

Ready Capital (NYSE:RC) and Federal Realty Investment Trust (NYSE:FRT) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Valuation & Earnings

This table compares Ready Capital and Federal Realty Investment Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ready Capital	$945.81 million	1.22	$339.45 million	($0.70)	-9.79
Federal Realty Investment Trust	$1.20 billion	7.49	$295.21 million	$3.43	30.65

Ready Capital has higher earnings, but lower revenue than Federal Realty Investment Trust. Ready Capital is trading at a lower price-to-earnings ratio than Federal Realty Investment Trust, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

55.9% of Ready Capital shares are held by institutional investors. Comparatively, 93.9% of Federal Realty Investment Trust shares are held by institutional investors. 1.1% of Ready Capital shares are held by company insiders. Comparatively, 1.1% of Federal Realty Investment Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Ready Capital and Federal Realty Investment Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ready Capital	1	6	1	0	2.00
Federal Realty Investment Trust	0	2	11	0	2.85

Ready Capital currently has a consensus price target of $8.61, suggesting a potential upside of 25.56%. Federal Realty Investment Trust has a consensus price target of $123.23, suggesting a potential upside of 17.23%. Given Ready Capital’s higher possible upside, equities analysts plainly believe Ready Capital is more favorable than Federal Realty Investment Trust.

Dividends

Ready Capital pays an annual dividend of $1.00 per share and has a dividend yield of 14.6%. Federal Realty Investment Trust pays an annual dividend of $4.40 per share and has a dividend yield of 4.2%. Ready Capital pays out -142.9% of its earnings in the form of a dividend. Federal Realty Investment Trust pays out 128.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federal Realty Investment Trust has increased its dividend for 58 consecutive years. Ready Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Ready Capital has a beta of 1.43, meaning that its share price is 43% more volatile than the S&P 500. Comparatively, Federal Realty Investment Trust has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500.

Profitability

This table compares Ready Capital and Federal Realty Investment Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ready Capital	-11.65%	7.53%	1.49%
Federal Realty Investment Trust	24.38%	9.89%	3.48%

Summary

Federal Realty Investment Trust beats Ready Capital on 12 of the 17 factors compared between the two stocks.

About Ready Capital

Ready Capital Corporation operates as a real estate finance company in the United States. It operates through two segments: LMM Commercial Real Estate and Small Business Lending. The company originates, acquires, finances, and services lower-to-middle-market (LLM) commercial real estate loans, small business administration (SBA) loans, residential mortgage loans, construction loans, and mortgage-backed securities collateralized primarily by LLM loans, or other real estate-related investments. The LMM Commercial Real Estate segment originates LLM loans across the full life-cycle of an LLM property, including construction, bridge, stabilized, and agency loan origination channels. The Small Business Lending segment acquires, originates, and services owner-occupied loans guaranteed by the SBA under its SBA Section 7(a) Program; and acquires purchased future receivables. The company has elected to be taxed as a real estate investment trust (REIT) and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Sutherland Asset Management Corporation and changed its name to Ready Capital Corporation in September 2018. Ready Capital Corporation was founded in 2007 and is headquartered in New York, New York.

About Federal Realty Investment Trust

Federal Realty Investment Trust is an equity real estate investment trust, which engages in the provision of ownership, management, and redevelopment of retail and mixed-use properties located primarily in communities where demand exceeds supply in strategically selected metropolitan markets. The company was founded in 1962 and is headquartered in North Bethesda, MD.