Financial Review: TPG RE Finance Trust (NYSE:TRTX) vs. Ready Capital (NYSE:RC)

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

Dividends

TPG RE Finance Trust pays an annual dividend of $0.96 per share and has a dividend yield of 12.2%. Ready Capital pays an annual dividend of $0.04 per share and has a dividend yield of 2.4%. 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. Ready Capital pays out -1.2% of its earnings in the form of a dividend.

Volatility and Risk

TPG RE Finance Trust has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500. Comparatively, Ready Capital has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for TPG RE Finance Trust and Ready Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TPG RE Finance Trust	0	2	4	0	2.67
Ready Capital	2	3	0	0	1.60

TPG RE Finance Trust currently has a consensus target price of $10.00, suggesting a potential upside of 26.76%. Ready Capital has a consensus target price of $2.17, suggesting a potential upside of 27.83%. Given Ready Capital’s higher probable upside, analysts plainly believe Ready Capital is more favorable than TPG RE Finance Trust.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TPG RE Finance Trust	$142.63 million	4.25	$60.32 million	$0.54	14.61
Ready Capital	$569.17 million	0.49	-$228.91 million	($3.47)	-0.49

TPG RE Finance Trust has higher earnings, but lower revenue than Ready Capital. Ready 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TPG RE Finance Trust	17.03%	6.85%	1.66%
Ready Capital	-131.76%	-16.78%	-3.43%

Insider and Institutional Ownership

57.1% of TPG RE Finance Trust shares are held by institutional investors. Comparatively, 55.9% of Ready Capital shares are held by institutional investors. 3.0% of TPG RE Finance Trust shares are held by company insiders. Comparatively, 1.4% of Ready Capital shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

TPG RE Finance Trust beats Ready Capital on 12 of the 16 factors compared between the two stocks.

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.

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.