Critical Survey: TPG RE Finance Trust (NYSE:TRTX) versus BrightSpire Capital (NYSE:BRSP)

BrightSpire Capital (NYSE:BRSP) and TPG RE Finance Trust (NYSE:TRTX) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, risk, institutional ownership, valuation, dividends and profitability.

Earnings & Valuation

This table compares BrightSpire Capital and TPG RE Finance Trust”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BrightSpire Capital	$327.94 million	1.41	-$31.15 million	($0.23)	-15.93
TPG RE Finance Trust	$332.58 million	1.45	$60.32 million	$0.54	11.66

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

Analyst Ratings

This is a breakdown of recent recommendations for BrightSpire Capital and TPG RE Finance Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BrightSpire Capital	3	0	6	0	2.33
TPG RE Finance Trust	0	3	4	0	2.57

BrightSpire Capital currently has a consensus target price of $6.00, indicating a potential upside of 63.71%. TPG RE Finance Trust has a consensus target price of $10.00, indicating a potential upside of 58.83%. Given BrightSpire Capital’s higher probable upside, equities analysts clearly believe BrightSpire Capital is more favorable than TPG RE Finance Trust.

Dividends

BrightSpire Capital pays an annual dividend of $0.64 per share and has a dividend yield of 17.5%. TPG RE Finance Trust pays an annual dividend of $0.96 per share and has a dividend yield of 15.2%. BrightSpire Capital pays out -278.3% of its earnings in the form of a dividend. TPG RE Finance Trust pays out 177.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BrightSpire Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares BrightSpire Capital and TPG RE Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BrightSpire Capital	-20.43%	7.01%	1.80%
TPG RE Finance Trust	17.03%	6.85%	1.66%

Institutional & Insider Ownership

56.6% of BrightSpire Capital shares are owned by institutional investors. Comparatively, 57.1% of TPG RE Finance Trust shares are owned by institutional investors. 2.8% of BrightSpire Capital shares are owned by company insiders. Comparatively, 3.0% of TPG RE Finance Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

BrightSpire Capital has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, TPG RE Finance Trust has a beta of 1.47, suggesting that its stock price is 47% more volatile than the S&P 500.

Summary

TPG RE Finance Trust beats BrightSpire Capital on 10 of the 16 factors compared between the two stocks.

About BrightSpire Capital

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States and Europe. The company operates through Senior and Mezzanine Loans and Preferred Equity; Net Leased and Other Real Estate; and Corporate and Other segments. It focuses on originating, acquiring, financing, and managing a diversified portfolio of CRE debt investments consisting of first mortgage loans, senior loans, debt securities, mezzanine loans, and preferred equity investments, as well as net leased properties. 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 Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.

About TPG RE Finance Trust

TPG RE Finance Trust, Inc., a commercial real estate finance company, originates, acquires, and manages commercial mortgage loans and other commercial real estate-related debt instruments in the United States. It invests in commercial mortgage loans; subordinate mortgage interests, mezzanine loans, secured real estate securities, note financing, preferred equity, and miscellaneous debt instruments; and commercial real estate collateralized loan obligations and commercial mortgage-backed securities secured by properties primarily in the multifamily, life science, mixed-use, hospitality, self storage, industrial, and retail real estate sectors. 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. TPG RE Finance Trust, Inc. was incorporated in 2014 and is based in New York, New York.