Pebblebrook Hotel Trust (NYSE:PEB – Get Free Report) and Ready Capital (NYSE:RC – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.
Profitability
This table compares Pebblebrook Hotel Trust and Ready Capital’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Pebblebrook Hotel Trust | 0.25% | 0.13% | 0.06% |
| Ready Capital | -11.65% | 7.53% | 1.49% |
Earnings and Valuation
This table compares Pebblebrook Hotel Trust and Ready Capital”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Pebblebrook Hotel Trust | $1.46 billion | 0.83 | -$78.02 million | ($0.48) | -21.14 |
| Ready Capital | $20.60 million | 37.46 | $339.45 million | ($1.74) | -2.60 |
Ready Capital has lower revenue, but higher earnings than Pebblebrook Hotel Trust. Pebblebrook Hotel Trust is trading at a lower price-to-earnings ratio than Ready Capital, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
55.9% of Ready Capital shares are held by institutional investors. 3.1% of Pebblebrook Hotel Trust shares are held by insiders. Comparatively, 1.1% of Ready Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Dividends
Pebblebrook Hotel Trust pays an annual dividend of $0.04 per share and has a dividend yield of 0.4%. Ready Capital pays an annual dividend of $0.50 per share and has a dividend yield of 11.0%. Pebblebrook Hotel Trust pays out -8.3% of its earnings in the form of a dividend. Ready Capital pays out -28.7% 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. Ready Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Ratings
This is a summary of recent recommendations for Pebblebrook Hotel Trust and Ready Capital, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Pebblebrook Hotel Trust | 1 | 5 | 1 | 0 | 2.00 |
| Ready Capital | 1 | 6 | 1 | 0 | 2.00 |
Pebblebrook Hotel Trust presently has a consensus target price of $12.78, suggesting a potential upside of 25.96%. Ready Capital has a consensus target price of $7.00, suggesting a potential upside of 54.70%. Given Ready Capital’s higher probable upside, analysts clearly believe Ready Capital is more favorable than Pebblebrook Hotel Trust.
Volatility and Risk
Pebblebrook Hotel Trust has a beta of 1.8, indicating that its stock price is 80% more volatile than the S&P 500. Comparatively, Ready Capital has a beta of 1.45, indicating that its stock price is 45% more volatile than the S&P 500.
Summary
Ready Capital beats Pebblebrook Hotel Trust on 9 of the 14 factors compared between the two stocks.
About Pebblebrook Hotel Trust
Pebblebrook Hotel Trust (NYSE: PEB) is a publicly traded real estate investment trust ("REIT") and the largest owner of urban and resort lifestyle hotels and resorts in the United States. The Company owns 47 hotels and resorts, totaling approximately 12,200 guest rooms across 13 urban and resort markets.
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.
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