Financial Review: Resource Capital Corp. (RSO) & Liberty Property Trust (LPT)

Resource Capital Corp. (NYSE: RSO) and Liberty Property Trust (NYSE:LPT) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.

Risk & Volatility



Resource Capital Corp. has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, Liberty Property Trust has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.

Institutional and Insider Ownership

45.8% of Resource Capital Corp. shares are held by institutional investors. Comparatively, 91.5% of Liberty Property Trust shares are held by institutional investors. 4.8% of Resource Capital Corp. shares are held by company insiders. Comparatively, 1.5% of Liberty Property Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for Resource Capital Corp. and Liberty Property Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Resource Capital Corp. 0 2 0 0 2.00
Liberty Property Trust 0 4 3 0 2.43

Resource Capital Corp. currently has a consensus target price of $10.25, suggesting a potential downside of 0.87%. Liberty Property Trust has a consensus target price of $43.40, suggesting a potential upside of 0.42%. Given Liberty Property Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Liberty Property Trust is more favorable than Resource Capital Corp..

Valuation & Earnings

This table compares Resource Capital Corp. and Liberty Property Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Resource Capital Corp. $36.21 million 8.80 -$56.42 million ($1.83) -5.65
Liberty Property Trust $728.41 million 8.74 $406.11 million $2.37 18.24

Liberty Property Trust has higher revenue and earnings than Resource Capital Corp.. Resource Capital Corp. is trading at a lower price-to-earnings ratio than Liberty Property Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Resource Capital Corp. pays an annual dividend of $0.20 per share and has a dividend yield of 1.9%. Liberty Property Trust pays an annual dividend of $1.60 per share and has a dividend yield of 3.7%. Resource Capital Corp. pays out -10.9% of its earnings in the form of a dividend. Liberty Property Trust pays out 67.5% 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. Resource Capital Corp. has raised its dividend for 2 consecutive years and Liberty Property Trust has raised its dividend for 2 consecutive years.

Profitability

This table compares Resource Capital Corp. and Liberty Property Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Resource Capital Corp. -48.78% -6.09% -2.12%
Liberty Property Trust 47.78% 11.41% 5.69%

Summary

Liberty Property Trust beats Resource Capital Corp. on 11 of the 15 factors compared between the two stocks.

Resource Capital Corp. Company Profile

Resource Capital Corp. is a real estate finance company. The Company operates through four segments: Commercial Real Estate Debt Investments, Commercial Finance, Residential Mortgage Lending and Corporate & Other. The Commercial Real Estate Debt Investments segment includes the Company’s activities and operations related to commercial real estate loans, commercial real estate-related securities and investments in real estate. The Commercial Finance segment includes the Company’s activities and operations related to syndicated corporate loans, syndicated corporate loan-related securities and direct financing leases. The Residential Mortgage Lending segment includes the Company’s activities and operations related to the investment in residential mortgage-backed securities (RMBS).

Liberty Property Trust Company Profile

Liberty Property Trust (the Trust) is a self-administered and self-managed Maryland real estate investment trust (REIT). The Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by its subsidiary, Liberty Property Limited Partnership (the Operating Partnership). The Company’s segments include Carolinas/Richmond; Chicago/Milwaukee; Florida; Houston; Lehigh/Central PA; Minnesota; Philadelphia; Southeastern PA; United Kingdom, and Other, which includes Arizona; Atlanta; Cincinnati/Columbus/Indianapolis; Dallas; DC Metro; New Jersey; Southern California, and other. The Company owns and operates industrial properties nationally and owns and operates office properties in a focused group of office markets. Additionally, the Company owns certain assets in the United Kingdom. As of December 31, 2016, the Company owned and operated 450 industrial and 55 office properties totaling 86.0 million square feet.

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