Analyzing Monmouth R.E. Inv. (MNR) & RAIT Financial Trust (RAS)

Monmouth R.E. Inv. (NYSE: MNR) and RAIT Financial Trust (NYSE:RAS) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, risk, earnings and dividends.

Volatility & Risk

Monmouth R.E. Inv. has a beta of 0.52, suggesting that its share price is 48% less volatile than the S&P 500. Comparatively, RAIT Financial Trust has a beta of 1.51, suggesting that its share price is 51% more volatile than the S&P 500.

Institutional and Insider Ownership

63.1% of Monmouth R.E. Inv. shares are held by institutional investors. Comparatively, 51.8% of RAIT Financial Trust shares are held by institutional investors. 5.3% of Monmouth R.E. Inv. shares are held by company insiders. Comparatively, 1.3% of RAIT Financial Trust shares are held 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.

Profitability

This table compares Monmouth R.E. Inv. and RAIT Financial Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Monmouth R.E. Inv. 30.84% 7.65% 2.58%
RAIT Financial Trust -137.66% -0.66% -0.09%

Dividends

Monmouth R.E. Inv. pays an annual dividend of $0.68 per share and has a dividend yield of 3.9%. RAIT Financial Trust pays an annual dividend of $0.20 per share and has a dividend yield of 54.2%. Monmouth R.E. Inv. pays out 212.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RAIT Financial Trust pays out -11.1% of its earnings in the form of a dividend. Monmouth R.E. Inv. has increased its dividend for 2 consecutive years. RAIT Financial Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Monmouth R.E. Inv. and RAIT Financial Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Monmouth R.E. Inv. $97.66 million 13.72 $40.27 million $0.32 54.69
RAIT Financial Trust $173.61 million 0.20 $25.34 million ($1.80) -0.21

Monmouth R.E. Inv. has higher earnings, but lower revenue than RAIT Financial Trust. RAIT Financial Trust is trading at a lower price-to-earnings ratio than Monmouth R.E. Inv., indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Monmouth R.E. Inv. and RAIT Financial Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Monmouth R.E. Inv. 0 1 4 0 2.80
RAIT Financial Trust 1 3 0 0 1.75

Monmouth R.E. Inv. presently has a consensus target price of $17.50, indicating a potential upside of 0.00%. RAIT Financial Trust has a consensus target price of $1.43, indicating a potential upside of 286.07%. Given RAIT Financial Trust’s higher possible upside, analysts clearly believe RAIT Financial Trust is more favorable than Monmouth R.E. Inv..

Summary

Monmouth R.E. Inv. beats RAIT Financial Trust on 12 of the 17 factors compared between the two stocks.

About Monmouth R.E. Inv.

Monmouth Real Estate Investment Corporation is a real estate investment trust (REIT). The Company’s primary business is the ownership of real estate. Its investment focus is to own single tenant, industrial buildings and leased to investment-grade tenants or their subsidiaries on long-term net leases. In addition, the Company owns a portfolio of REIT investment securities. Its assets are situated near airports, transportation hubs and manufacturing plants. The Company’s property portfolio consists of approximately 109 properties located across 30 states, containing a total of approximately 18.9 million rentable square feet.

About RAIT Financial Trust

RAIT Financial Trust (RAIT) is a real estate investment trust (REIT). The Company focuses on providing commercial real estate (CRE) financing throughout the United States. The core of its business is a full service CRE lending platform focused on first lien loans. It offers customized lending solutions to meet borrower needs and internal credit goals. It offers personalized middle-market financing solutions and a complement of lending products for CRE. The Company may also offer mezzanine loans and preferred equity interests in limited circumstances to support first lien loans. It is engaged in floating rate securitization programs and has access to multiple sources of funding, including senior debt, convertible securities, preferred securities and common securities. The Company also owns and manages a portfolio of CRE properties, and manages real estate assets for third parties. The Company is engaged in lending, owning and managing CRE assets throughout the United States.

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