Critical Comparison: RAIT Financial Trust (RAS) versus DuPont Fabros Technology (DFT)
RAIT Financial Trust (NYSE: RAS) and DuPont Fabros Technology (NYSE:DFT) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, earnings, risk, analyst recommendations and institutional ownership.
RAIT Financial Trust pays an annual dividend of $0.20 per share and has a dividend yield of 27.4%. DuPont Fabros Technology pays an annual dividend of $2.00 per share and has a dividend yield of 3.0%. RAIT Financial Trust pays out -13.0% of its earnings in the form of a dividend. DuPont Fabros Technology pays out 122.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DuPont Fabros Technology has raised its dividend for 5 consecutive years. RAIT Financial Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares RAIT Financial Trust and DuPont Fabros Technology’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|RAIT Financial Trust||-99.46%||0.98%||0.15%|
|DuPont Fabros Technology||26.98%||17.13%||4.69%|
Earnings & Valuation
This table compares RAIT Financial Trust and DuPont Fabros Technology’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|RAIT Financial Trust||$58.82 million||1.16||-$143.38 million||($1.54)||-0.47|
|DuPont Fabros Technology||$543.97 million||9.45||$333.04 million||$1.64||40.43|
DuPont Fabros Technology has higher revenue and earnings than RAIT Financial Trust. RAIT Financial Trust is trading at a lower price-to-earnings ratio than DuPont Fabros Technology, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
RAIT Financial Trust has a beta of 1.63, suggesting that its share price is 63% more volatile than the S&P 500. Comparatively, DuPont Fabros Technology has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500.
This is a summary of recent ratings and recommmendations for RAIT Financial Trust and DuPont Fabros Technology, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|RAIT Financial Trust||1||2||0||0||1.67|
|DuPont Fabros Technology||0||9||4||0||2.31|
RAIT Financial Trust currently has a consensus target price of $1.43, suggesting a potential upside of 95.21%. DuPont Fabros Technology has a consensus target price of $60.15, suggesting a potential downside of 9.29%. Given RAIT Financial Trust’s higher probable upside, research analysts clearly believe RAIT Financial Trust is more favorable than DuPont Fabros Technology.
Insider and Institutional Ownership
59.9% of RAIT Financial Trust shares are owned by institutional investors. 1.3% of RAIT Financial Trust shares are owned by insiders. Comparatively, 5.6% of DuPont Fabros Technology shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
DuPont Fabros Technology beats RAIT Financial Trust on 11 of the 16 factors compared between the two stocks.
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.
About DuPont Fabros Technology
DuPont Fabros Technology, Inc. (DFT) is a real estate investment trust (REIT). The Company owns, acquires, develops and operates wholesale data centers. The Company’s customers include national and international enterprises across various industries, such as technology, Internet, content providers, cloud providers, media, communications, healthcare and financial services. Its data centers are located in four population centers: Northern Virginia; suburban Chicago, Illinois; Piscataway, New Jersey, and Santa Clara, California. As of December 31, 2016, the Company owned various properties, including 11 operating data centers facilities; five phases of existing data center facilities under development; one shell of a data center under development; two data center facilities with a phase or phases available for development, and parcels of land held for development of four data centers. As of December 31, 2016, the Company’s 11 data centers had a total of 3.3 million gross square feet.
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