Head-To-Head Contrast: Forestar Group (NYSE:FOR) vs. American Realty Investors (NYSE:ARL)

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

Institutional & Insider Ownership

35.5% of Forestar Group shares are held by institutional investors. 90.8% of American Realty Investors shares are held by insiders. Comparatively, 0.5% of Forestar Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

American Realty Investors has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, Forestar Group has a beta of 1.41, suggesting that its share price is 41% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for American Realty Investors and Forestar Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Realty Investors	1	0	0	0	1.00
Forestar Group	0	4	2	0	2.33

Forestar Group has a consensus price target of $32.67, indicating a potential upside of 27.27%. Given Forestar Group’s stronger consensus rating and higher probable upside, analysts clearly believe Forestar Group is more favorable than American Realty Investors.

Profitability

This table compares American Realty Investors and Forestar Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Realty Investors	16.36%	-0.37%	-0.28%
Forestar Group	9.88%	9.42%	5.36%

Earnings & Valuation

This table compares American Realty Investors and Forestar Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Realty Investors	$50.01 million	5.31	$15.70 million	$0.52	31.61
Forestar Group	$1.66 billion	0.79	$167.90 million	$3.33	7.71

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

Summary

Forestar Group beats American Realty Investors on 10 of the 14 factors compared between the two stocks.

About American Realty Investors

American Realty Investors, Inc., together with its subsidiaries, acquires, develops, owns, and manages multifamily and commercial real estate properties in the Southern United States. It operates through two segments, Residential and Commercial. The company leases apartment units to residents; and office, industrial, and retail space to various for-profit businesses, as well as local, state, and federal agencies. It also offers tenant services, including parking and storage space rental; and sells land and properties. The company was incorporated in 1999 and is based in Dallas, Texas. American Realty Investors, Inc. is a subsidiary of Realty Advisors, Inc.

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.