Ready Capital (NYSE:RC – Get Free Report) and Service Properties Trust (NASDAQ:SVC – Get Free Report) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.
Institutional and Insider Ownership
55.9% of Ready Capital shares are held by institutional investors. Comparatively, 77.6% of Service Properties Trust shares are held by institutional investors. 1.0% of Ready Capital shares are held by insiders. Comparatively, 1.4% of Service Properties Trust shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of recent ratings and price targets for Ready Capital and Service Properties Trust, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ready Capital | 1 | 3 | 1 | 0 | 2.00 |
| Service Properties Trust | 1 | 1 | 1 | 0 | 2.00 |
Valuation and Earnings
This table compares Ready Capital and Service Properties 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 | $945.81 million | 1.67 | $339.45 million | $2.34 | 3.91 |
| Service Properties Trust | $1.87 billion | 0.60 | -$32.78 million | ($0.20) | -33.90 |
Ready Capital has higher earnings, but lower revenue than Service Properties Trust. Service Properties Trust is trading at a lower price-to-earnings ratio than Ready Capital, indicating that it is currently the more affordable of the two stocks.
Dividends
Ready Capital pays an annual dividend of $1.20 per share and has a dividend yield of 13.1%. Service Properties Trust pays an annual dividend of $0.80 per share and has a dividend yield of 11.8%. Ready Capital pays out 51.3% of its earnings in the form of a dividend. Service Properties Trust pays out -400.0% 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.
Profitability
This table compares Ready Capital and Service Properties Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ready Capital | 35.69% | 7.99% | 1.54% |
| Service Properties Trust | -1.75% | -2.50% | -0.44% |
Volatility and Risk
Ready Capital has a beta of 1.4, meaning that its share price is 40% more volatile than the S&P 500. Comparatively, Service Properties Trust has a beta of 2.18, meaning that its share price is 118% more volatile than the S&P 500.
Summary
Ready Capital beats Service Properties Trust on 9 of the 14 factors compared between the two stocks.
About Ready Capital
Ready Capital Corporation operates as a real estate finance company in the United States. It operates through two segments: LMM Commercial Real Estate and Small Business Lending. The company originates, acquires, finances, and services lower-to-middle-market (LLM) commercial real estate loans, small business administration (SBA) loans, residential mortgage loans, construction loans, and mortgage-backed securities collateralized primarily by LLM loans, or other real estate-related investments. The LMM Commercial Real Estate segment originates LLM loans across the full life-cycle of an LLM property, including construction, bridge, stabilized, and agency loan origination channels. The Small Business Lending segment acquires, originates, and services owner-occupied loans guaranteed by the SBA under its SBA Section 7(a) Program; and acquires purchased future receivables. The company has elected to be taxed as a real estate investment trust (REIT) and 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.
About Service Properties Trust
Service Properties Trust (Nasdaq: SVC) is a real estate investment trust, or REIT, with over $11 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of September 30, 2023, SVC owned 221 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of September 30, 2023, SVC also owned 761 retail service-focused net lease properties totaling approximately 13.4 million square feet throughout the United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with approximately $36 billion in assets under management as of September 30, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA.
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