Critical Contrast: Exantas Capital (XAN) & Vereit (VER)

Exantas Capital (NYSE:XAN) and Vereit (NYSE:VER) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, profitability and earnings.

Dividends

Exantas Capital pays an annual dividend of $0.60 per share and has a dividend yield of 5.4%. Vereit pays an annual dividend of $0.55 per share and has a dividend yield of 7.3%. Exantas Capital pays out -69.8% of its earnings in the form of a dividend. Vereit pays out 78.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Exantas Capital and Vereit’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Exantas Capital 29.89% 0.55% 0.17%
Vereit -4.44% -0.40% -0.22%

Institutional and Insider Ownership

52.6% of Exantas Capital shares are owned by institutional investors. Comparatively, 87.4% of Vereit shares are owned by institutional investors. 4.8% of Exantas Capital shares are owned by company insiders. Comparatively, 0.1% of Vereit shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Exantas Capital and Vereit, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Exantas Capital 0 0 3 0 3.00
Vereit 0 2 3 0 2.60

Exantas Capital presently has a consensus target price of $12.50, suggesting a potential upside of 12.61%. Vereit has a consensus target price of $8.75, suggesting a potential upside of 16.20%. Given Vereit’s higher possible upside, analysts plainly believe Vereit is more favorable than Exantas Capital.

Risk & Volatility

Exantas Capital has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Vereit has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500.

Earnings and Valuation

This table compares Exantas Capital and Vereit’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Exantas Capital $43.71 million 8.04 $33.53 million ($0.86) -12.91
Vereit $1.25 billion 5.80 $31.81 million $0.70 10.73

Exantas Capital has higher earnings, but lower revenue than Vereit. Exantas Capital is trading at a lower price-to-earnings ratio than Vereit, indicating that it is currently the more affordable of the two stocks.

Summary

Exantas Capital beats Vereit on 9 of the 15 factors compared between the two stocks.

Exantas Capital Company Profile

Exantas Capital Corp., a real estate investment trust, primarily focuses on the origination, holding, and management of commercial mortgage loans and commercial real estate-related debt investments in the United States. It invests in commercial real estate-related assets, such as first mortgage loans, first priority interests in first mortgage loans, subordinated interests in first mortgage loans, mezzanine debt, and commercial mortgage-backed securities. The company is also involved in the investment of commercial finance assets, including asset-backed securities, debt tranches of collateralized debt and loan obligations, structured note investments, syndicated corporate loans, and preferred equity investment in a commercial leasing enterprise. It qualifies as a real estate investment trust (REIT) for federal income tax purposes. The company generally would not be subject to federal corporate income tax to the extent that it distributes 100% of its REIT taxable income. The company was formerly known as Resource Capital Corp. and changed its name to Exantas Capital Corp. in May 2018. Exantas Capital Corp. was founded in 2005 and is based in New York, New York.

Vereit Company Profile

VEREIT is a full-service real estate operating company which owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. The Company has a total asset book value of $14.3 billion including approximately 4,000 properties and 94.6 million square feet. VEREIT's business model provides equity capital to creditworthy corporations in return for long-term leases on their properties. VEREIT is a publicly traded Maryland corporation listed on the New York Stock Exchange.

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