Analyzing Douglas Emmett (NYSE:DEI) and Ready Capital (NYSE:RC)

Douglas Emmett (NYSE:DEI) and Ready Capital (NYSE:RC) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, institutional ownership, risk, analyst recommendations, profitability, earnings and valuation.

Risk & Volatility

Douglas Emmett has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500. Comparatively, Ready Capital has a beta of 1.43, indicating that its stock price is 43% more volatile than the S&P 500.

Dividends

Douglas Emmett pays an annual dividend of $0.76 per share and has a dividend yield of 4.7%. Ready Capital pays an annual dividend of $0.50 per share and has a dividend yield of 9.8%. Douglas Emmett pays out 584.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ready Capital pays out -18.9% of its earnings in the form of a dividend. Ready Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings for Douglas Emmett and Ready Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Douglas Emmett	0	5	4	0	2.44
Ready Capital	1	7	1	0	2.00

Douglas Emmett presently has a consensus price target of $18.50, suggesting a potential upside of 13.43%. Ready Capital has a consensus price target of $7.50, suggesting a potential upside of 46.77%. Given Ready Capital’s higher possible upside, analysts plainly believe Ready Capital is more favorable than Douglas Emmett.

Insider & Institutional Ownership

97.4% of Douglas Emmett shares are owned by institutional investors. Comparatively, 55.9% of Ready Capital shares are owned by institutional investors. 14.7% of Douglas Emmett shares are owned by company insiders. Comparatively, 1.1% of Ready Capital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Douglas Emmett and Ready Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Douglas Emmett	2.38%	0.63%	0.25%
Ready Capital	-11.65%	7.53%	1.49%

Earnings & Valuation

This table compares Douglas Emmett and Ready Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Douglas Emmett	$986.48 million	2.77	$23.52 million	$0.13	125.46
Ready Capital	$27.35 million	32.10	$339.45 million	($2.64)	-1.94

Ready Capital has lower revenue, but higher earnings than Douglas Emmett. Ready Capital is trading at a lower price-to-earnings ratio than Douglas Emmett, indicating that it is currently the more affordable of the two stocks.

About Douglas Emmett

Douglas Emmett, Inc. (DEI) is a fully integrated, self-administered and self-managed real estate investment trust (REIT), and one of the largest owners and operators of high-quality office and multifamily properties located in the premier coastal submarkets of Los Angeles and Honolulu. Douglas Emmett focuses on owning and acquiring a substantial share of top-tier office properties and premier multifamily communities in neighborhoods that possess significant supply constraints, high-end executive housing and key lifestyle amenities.

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.