Ready Capital (RC) & Lexington Realty Trust (LXP) Financial Contrast

Ready Capital (NYSE:RC) and Lexington Realty Trust (NYSE:LXP) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, risk, dividends and institutional ownership.

Profitability

This table compares Ready Capital and Lexington Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ready Capital 28.04% 10.25% 2.03%
Lexington Realty Trust 57.52% 18.56% 6.95%

Valuation and Earnings

This table compares Ready Capital and Lexington Realty Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ready Capital $317.42 million 1.55 $59.26 million $1.76 8.69
Lexington Realty Trust $395.34 million 5.44 $227.41 million $0.96 9.52

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

Volatility & Risk

Ready Capital has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, Lexington Realty Trust has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.

Dividends

Ready Capital pays an annual dividend of $1.60 per share and has a dividend yield of 10.5%. Lexington Realty Trust pays an annual dividend of $0.41 per share and has a dividend yield of 4.5%. Ready Capital pays out 90.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lexington Realty Trust pays out 42.7% of its earnings in the form of a dividend. Lexington Realty Trust has increased its dividend for 8 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Ready Capital and Lexington Realty Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ready Capital 0 2 5 0 2.71
Lexington Realty Trust 1 0 3 0 2.50

Ready Capital currently has a consensus target price of $17.17, indicating a potential upside of 12.27%. Lexington Realty Trust has a consensus target price of $8.33, indicating a potential downside of 8.83%. Given Ready Capital’s stronger consensus rating and higher probable upside, analysts clearly believe Ready Capital is more favorable than Lexington Realty Trust.

Institutional & Insider Ownership

35.3% of Ready Capital shares are held by institutional investors. Comparatively, 76.5% of Lexington Realty Trust shares are held by institutional investors. 2.5% of Ready Capital shares are held by company insiders. Comparatively, 3.3% of Lexington Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Lexington Realty Trust beats Ready Capital on 12 of the 17 factors compared between the two stocks.

Ready Capital Company Profile

Ready Capital Corporation operates as a real estate finance company in the United States. The company originates, acquires, finances, and services small balance commercial (SBC) loans, small business administration (SBA) loans, and residential mortgage loans, as well as mortgage backed securities collateralized primarily by SBC loans, or other real estate-related investments. It operates through four segments: Loan Acquisitions; SBC Originations; SBA Originations, Acquisitions and Servicing; and Residential Mortgage Banking. The Loan Acquisitions segment acquires performing and non-performing SBC loans. The SBC Originations segment originates SBC loans secured by stabilized or transitional investor properties using various loan origination channels; and originates and services multi-family loan products. The SBA Originations, Acquisitions and Servicing segment acquires, originates, and services owner-occupied loans guaranteed by the SBA. The Residential Mortgage Banking segment originates residential mortgage loans through retail, correspondent, and broker channels. 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 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.

Lexington Realty Trust Company Profile

Lexington Realty Trust (NYSE: LXP) is a publicly traded real estate investment trust (REIT) that owns a diversified portfolio of real estate assets consisting primarily of equity investments in single-tenant net-leased commercial properties across the United States. Lexington seeks to expand its industrial portfolio through build-to-suit transactions, sale-leaseback transactions and other transactions, including acquisitions.

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