Critical Contrast: BrightSpire Capital (NYSE:BRSP) versus Franklin BSP Realty Trust (NYSE:FBRT)

BrightSpire Capital (NYSE:BRSP) and Franklin BSP Realty Trust (NYSE:FBRT) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, risk, earnings and analyst recommendations.

Institutional & Insider Ownership

56.6% of BrightSpire Capital shares are owned by institutional investors. Comparatively, 59.9% of Franklin BSP Realty Trust shares are owned by institutional investors. 2.8% of BrightSpire Capital shares are owned by company insiders. Comparatively, 1.3% of Franklin BSP Realty Trust 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.

Valuation & Earnings

This table compares BrightSpire Capital and Franklin BSP Realty Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BrightSpire Capital	$194.89 million	3.99	-$31.15 million	($0.27)	-22.13
Franklin BSP Realty Trust	$270.07 million	2.59	$82.27 million	$0.51	17.81

Franklin BSP Realty Trust has higher revenue and earnings than BrightSpire Capital. BrightSpire Capital is trading at a lower price-to-earnings ratio than Franklin BSP Realty Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

BrightSpire Capital pays an annual dividend of $0.64 per share and has a dividend yield of 10.7%. Franklin BSP Realty Trust pays an annual dividend of $0.80 per share and has a dividend yield of 8.8%. BrightSpire Capital pays out -237.0% of its earnings in the form of a dividend. Franklin BSP Realty Trust pays out 156.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BrightSpire Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

BrightSpire Capital has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500. Comparatively, Franklin BSP Realty Trust has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for BrightSpire Capital and Franklin BSP Realty Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BrightSpire Capital	1	1	4	0	2.50
Franklin BSP Realty Trust	2	0	3	0	2.20

BrightSpire Capital presently has a consensus target price of $6.75, indicating a potential upside of 12.97%. Franklin BSP Realty Trust has a consensus target price of $11.50, indicating a potential upside of 26.58%. Given Franklin BSP Realty Trust’s higher possible upside, analysts plainly believe Franklin BSP Realty Trust is more favorable than BrightSpire Capital.

Profitability

This table compares BrightSpire Capital and Franklin BSP Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BrightSpire Capital	-24.16%	7.46%	2.03%
Franklin BSP Realty Trust	24.26%	6.46%	1.34%

Summary

BrightSpire Capital beats Franklin BSP Realty Trust on 9 of the 16 factors compared between the two stocks.

About BrightSpire Capital

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States and Europe. The company operates through Senior and Mezzanine Loans and Preferred Equity; Net Leased and Other Real Estate; and Corporate and Other segments. It focuses on originating, acquiring, financing, and managing a diversified portfolio of CRE debt investments consisting of first mortgage loans, senior loans, debt securities, mezzanine loans, and preferred equity investments, as well as net leased properties. The company qualifies as a real estate investment trust for federal income tax purposes. It generally 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 Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.

About Franklin BSP Realty Trust

Benefit Street Partners operates as a self-managed real estate investment trust (REIT). BSP earns income from investing in a leveraged portfolio of residential mortgage pass-through securities consisting almost exclusively of adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the government-sponsored enterprises (GSEs)), or by an agency of the federal government, Government National Mortgage Association (Ginnie Mae). BSP’s investment strategy focuses on managing a portfolio of residential mortgage investments consisting almost exclusively of ARM Agency Securities. As of December 31, 2012, the Company’s securities consisted of Agency Securities classified as available-for-sale and Residential mortgage securities classified as held-to-maturity.