Head-To-Head Analysis: Colony NorthStar (CLNS) & Ready Capital (RC)

Ready Capital (NYSE:RC) and Colony NorthStar (NYSE:CLNS) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, dividends, analyst recommendations, institutional ownership, valuation, earnings and profitability.

Profitability

This table compares Ready Capital and Colony NorthStar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ready Capital 33.24% 9.68% 2.07%
Colony NorthStar -9.27% -2.42% -1.06%

Volatility & Risk

Ready Capital has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, Colony NorthStar has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Ready Capital and Colony NorthStar, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ready Capital 0 4 3 0 2.43
Colony NorthStar 0 1 4 0 2.80

Ready Capital presently has a consensus price target of $17.30, indicating a potential upside of 8.46%. Colony NorthStar has a consensus price target of $11.40, indicating a potential upside of 77.85%. Given Colony NorthStar’s stronger consensus rating and higher possible upside, analysts clearly believe Colony NorthStar is more favorable than Ready Capital.

Earnings and Valuation

This table compares Ready Capital and Colony NorthStar’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ready Capital $138.30 million 3.70 $43.29 million $1.42 11.23
Colony NorthStar $2.80 billion 1.14 -$197.89 million N/A N/A

Ready Capital has higher earnings, but lower revenue than Colony NorthStar.

Insider & Institutional Ownership

32.2% of Ready Capital shares are owned by institutional investors. Comparatively, 83.3% of Colony NorthStar shares are owned by institutional investors. 2.5% of Ready Capital shares are owned by insiders. Comparatively, 7.8% of Colony NorthStar shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Ready Capital pays an annual dividend of $1.60 per share and has a dividend yield of 10.0%. Colony NorthStar pays an annual dividend of $0.44 per share and has a dividend yield of 6.9%. Ready Capital pays out 112.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Colony NorthStar beats Ready Capital on 8 of the 14 factors compared between the two stocks.

About Ready Capital

Ready Capital Corp., a real estate investment trust, acquires, originates, manages and finances commercial mortgage real estate loans or SBC loans and real estate-related securities in the US. Its SBC loans in the range of $500,000 to $10 million.

About Colony NorthStar

Colony NorthStar, Inc. (NYSE:CLNS) is a leading global real estate and investment management firm. The Company resulted from the January 2017 merger between Colony Capital, Inc., NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp. The Company has significant property holdings in the healthcare, industrial and hospitality sectors, other equity and debt investments and an embedded institutional and retail investment management business. The Company currently has assets under management of $43 billion and manages capital on behalf of its stockholders, as well as institutional and retail investors in private funds, non-traded and traded real estate investment trusts and registered investment companies. In addition, the Company owns NorthStar Securities, LLC, a captive broker-dealer platform which raises capital in the retail market. The firm maintains principal offices in Los Angeles and New York, with more than 500 employees in offices located across 18 cities in ten countries. The Company will elect to be taxed as a REIT for U.S. federal income tax purposes. For additional information regarding the Company and its management and business, please refer to www.clns.com.

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