American Assets Trust (NYSE: AAT) 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, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Volatility & Risk

American Assets Trust has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500. Comparatively, RAIT Financial Trust has a beta of 1.66, indicating that its share price is 66% more volatile than the S&P 500.

Valuation & Earnings

This table compares American Assets Trust and RAIT Financial Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
American Assets Trust $295.09 million 6.30 $45.63 million $0.66 59.73
RAIT Financial Trust $173.61 million 0.21 $25.34 million ($1.80) -0.21

American Assets Trust has higher revenue and earnings than RAIT Financial Trust. RAIT Financial Trust is trading at a lower price-to-earnings ratio than American Assets Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations for American Assets Trust and RAIT Financial Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Assets Trust 0 2 1 0 2.33
RAIT Financial Trust 1 3 0 0 1.75

American Assets Trust currently has a consensus target price of $45.00, suggesting a potential upside of 14.16%. RAIT Financial Trust has a consensus target price of $1.43, suggesting a potential upside of 272.45%. Given RAIT Financial Trust’s higher possible upside, analysts plainly believe RAIT Financial Trust is more favorable than American Assets Trust.

Profitability

This table compares American Assets Trust and RAIT Financial Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Assets Trust 10.90% 3.97% 1.58%
RAIT Financial Trust -137.66% -0.59% -0.08%

Dividends

American Assets Trust pays an annual dividend of $1.04 per share and has a dividend yield of 2.6%. RAIT Financial Trust pays an annual dividend of $0.20 per share and has a dividend yield of 52.3%. American Assets Trust pays out 157.6% 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. RAIT Financial Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

98.0% of American Assets Trust shares are owned by institutional investors. Comparatively, 58.5% of RAIT Financial Trust shares are owned by institutional investors. 34.2% of American Assets Trust shares are owned by insiders. Comparatively, 1.3% of RAIT Financial Trust shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

American Assets Trust beats RAIT Financial Trust on 11 of the 15 factors compared between the two stocks.

American Assets Trust Company Profile

American Assets Trust, Inc. is a full service, vertically integrated and self-administered real estate investment trust (REIT). The Company owns, operates, acquires and develops retail, office, multifamily and mixed-use properties in Southern California, Northern California, Oregon, Washington, Texas and Hawaii markets. The Company operates in four business segments: retail, office, multifamily and mixed-use. As of December 31, 2016, the Company’s portfolio consisted of 11 retail shopping centers; seven office properties; a mixed-use property consisting of a 369-room all-suite hotel and a retail shopping center, and five multifamily properties. Additionally, as of December 31, 2016, the Company owned land at four of its properties that it classified as held for development and construction in progress. The Company’s markets include San Diego, the San Francisco Bay Area, Portland, Oregon, Bellevue, Washington and Oahu, Hawaii.

RAIT Financial Trust Company Profile

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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