Sutherland Asset Management Corp. (NYSE: SLD) and iStar Financial (NYSE:STAR) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, profitability, analyst recommendations, institutional ownership, earnings, valuation and dividends.

Analyst Ratings

This is a summary of current ratings and recommmendations for Sutherland Asset Management Corp. and iStar Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sutherland Asset Management Corp. 0 1 2 0 2.67
iStar Financial 0 2 0 0 2.00

Sutherland Asset Management Corp. presently has a consensus price target of $16.00, suggesting a potential upside of 0.31%. iStar Financial has a consensus price target of $14.00, suggesting a potential upside of 23.46%. Given iStar Financial’s higher probable upside, analysts clearly believe iStar Financial is more favorable than Sutherland Asset Management Corp..

Dividends

Sutherland Asset Management Corp. pays an annual dividend of $1.48 per share and has a dividend yield of 9.3%. iStar Financial does not pay a dividend. Sutherland Asset Management Corp. pays out 80.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares Sutherland Asset Management Corp. and iStar Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Sutherland Asset Management Corp. $99.73 million 5.12 $49.16 million $1.83 8.72
iStar Financial $477.03 million 1.62 $95.30 million $0.91 12.46

iStar Financial has higher revenue and earnings than Sutherland Asset Management Corp.. Sutherland Asset Management Corp. is trading at a lower price-to-earnings ratio than iStar Financial, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

29.9% of Sutherland Asset Management Corp. shares are owned by institutional investors. Comparatively, 86.1% of iStar Financial shares are owned by institutional investors. 2.4% of Sutherland Asset Management Corp. shares are owned by company insiders. Comparatively, 4.4% of iStar Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Sutherland Asset Management Corp. and iStar Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sutherland Asset Management Corp. 42.78% 8.15% 1.79%
iStar Financial 24.13% 19.57% 3.97%

Volatility & Risk

Sutherland Asset Management Corp. has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500. Comparatively, iStar Financial has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500.

Summary

iStar Financial beats Sutherland Asset Management Corp. on 9 of the 16 factors compared between the two stocks.

Sutherland Asset Management Corp. Company Profile

Sutherland Asset Management Corporation, formerly ZAIS Financial Corp., is a diversified mortgage real estate investment trust (REIT). The Company originates, acquires, finances, services and manages small balance commercial loans (SBC) and Small Business Administration (SBA) loans. The Company focuses on maintaining its existing residential mortgage origination platform, GMFS. The Company originates SBC and SBA loans through its ReadyCap subsidiaries. The Company also invests in asset-backed securities, where the underlying pool of assets consists primarily of SBC loans, and other real estate-related investments. The Company is managed and advised by Waterfall Asset Management, LLC.

iStar Financial Company Profile

iStar Inc. finances, invests in and develops real estate and real estate related projects as part of its integrated investment platform. The Company’s four business segments are Real Estate Finance, Net Lease, Operating Properties, and Land and Development. The Real Estate Finance portfolio consists of senior and mezzanine real estate loans that may be either fixed-rate or variable-rate. The Net Lease portfolio consists of properties owned by the Company and leased to single tenants, where the properties are subject to long-term leases. The Operating Properties portfolio consists of commercial and residential properties, which represent a pool of assets across a range of geographies and property types. The Land and Development portfolio consists of land entitled for master planned communities, as well as waterfront and urban infill land parcels located throughout the United States. Its Land and Development projects include Great Oaks, Sage Scottsdale, Naples Reserve and Coney Island.

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