Head to Head Comparison: Forestar Group (NYSE:FOR) & Stratus Properties (NASDAQ:STRS)

Stratus Properties (NASDAQ:STRS) and Forestar Group (NYSE:FOR) are both small-cap real estate companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, profitability, earnings, risk, institutional ownership and valuation.

Institutional and Insider Ownership

61.6% of Stratus Properties shares are held by institutional investors. Comparatively, 35.5% of Forestar Group shares are held by institutional investors. 10.0% of Stratus Properties shares are held by company insiders. Comparatively, 0.5% of Forestar Group shares are held by company 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 summary of recent ratings and target prices for Stratus Properties and Forestar Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stratus Properties	1	0	0	0	1.00
Forestar Group	0	3	2	0	2.40

Forestar Group has a consensus price target of $36.50, suggesting a potential upside of 49.10%. Given Forestar Group’s stronger consensus rating and higher possible upside, analysts clearly believe Forestar Group is more favorable than Stratus Properties.

Risk and Volatility

Stratus Properties has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500. Comparatively, Forestar Group has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500.

Profitability

This table compares Stratus Properties and Forestar Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stratus Properties	74.96%	6.28%	3.83%
Forestar Group	8.72%	7.73%	4.43%

Earnings & Valuation

This table compares Stratus Properties and Forestar Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stratus Properties	$28.66 million	4.86	$11.98 million	$2.64	6.59
Forestar Group	$1.64 billion	0.76	$142.60 million	$2.78	8.81

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

Summary

Forestar Group beats Stratus Properties on 10 of the 14 factors compared between the two stocks.

About Stratus Properties

Stratus Properties Inc., a real estate company, engages in the entitlement, development, management, leasing, and sale of multi and single family residential and commercial real estate properties in the Austin, Texas area and other select markets in Texas. The company operates in two segments, Real Estate Operations and Leasing Operations. Its leasing operations cover lease of space at retail and mixed-use and multi-family properties. The company was incorporated in 1992 and is headquartered in Austin, Texas.

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.