Head-To-Head Contrast: Franklin BSP Realty Trust (NYSE:FBRT) and Ready Capital (NYSE:RC)

Ready Capital (NYSE:RC) and Franklin BSP Realty Trust (NYSE:FBRT) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, institutional ownership, analyst recommendations and profitability.

Volatility & Risk

Ready Capital has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500. Comparatively, Franklin BSP Realty Trust has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Profitability

This table compares Ready Capital and Franklin BSP Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ready Capital	-40.59%	3.76%	0.72%
Franklin BSP Realty Trust	53.36%	7.26%	1.54%

Analyst Ratings

This is a summary of recent ratings and target prices for Ready Capital and Franklin BSP Realty Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ready Capital	1	5	1	0	2.00
Franklin BSP Realty Trust	0	0	4	2	3.33

Ready Capital presently has a consensus price target of $5.88, indicating a potential upside of 37.33%. Franklin BSP Realty Trust has a consensus price target of $14.88, indicating a potential upside of 28.73%. Given Ready Capital’s higher probable upside, analysts clearly believe Ready Capital is more favorable than Franklin BSP Realty Trust.

Valuation and Earnings

This table compares Ready Capital and Franklin BSP Realty Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ready Capital	$896.97 million	0.78	-$435.76 million	($1.85)	-2.31
Franklin BSP Realty Trust	$210.45 million	4.52	$95.88 million	$0.98	11.79

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

Institutional & Insider Ownership

55.9% of Ready Capital shares are held by institutional investors. Comparatively, 59.9% of Franklin BSP Realty Trust shares are held by institutional investors. 1.1% of Ready Capital shares are held by company insiders. Comparatively, 0.7% of Franklin BSP Realty Trust 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.

Dividends

Ready Capital pays an annual dividend of $0.50 per share and has a dividend yield of 11.7%. Franklin BSP Realty Trust pays an annual dividend of $1.42 per share and has a dividend yield of 12.3%. Ready Capital pays out -27.0% of its earnings in the form of a dividend. Franklin BSP Realty Trust pays out 144.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Franklin BSP Realty Trust beats Ready Capital on 12 of the 17 factors compared between the two stocks.

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.

About Franklin BSP Realty Trust

Benefit Street Partners operates as a self-managed real estate investment trust (REIT). BSP earns income from investing in a leveraged portfolio of residential mortgage pass-through securities consisting almost exclusively of adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the government-sponsored enterprises (GSEs)), or by an agency of the federal government, Government National Mortgage Association (Ginnie Mae). BSP’s investment strategy focuses on managing a portfolio of residential mortgage investments consisting almost exclusively of ARM Agency Securities. As of December 31, 2012, the Company’s securities consisted of Agency Securities classified as available-for-sale and Residential mortgage securities classified as held-to-maturity.