Financial Analysis: FirstService (NASDAQ:FSV) versus American Realty Investors (NYSE:ARL)

American Realty Investors (NYSE:ARL) and FirstService (NASDAQ:FSV) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.

Analyst Recommendations

This is a breakdown of recent ratings for American Realty Investors and FirstService, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Realty Investors	0	1	0	0	2.00
FirstService	0	2	6	0	2.75

FirstService has a consensus target price of $211.67, indicating a potential upside of 33.39%. Given FirstService’s stronger consensus rating and higher possible upside, analysts plainly believe FirstService is more favorable than American Realty Investors.

Profitability

This table compares American Realty Investors and FirstService’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Realty Investors	11.74%	0.33%	0.25%
FirstService	2.64%	19.10%	5.58%

Risk & Volatility

American Realty Investors has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500. Comparatively, FirstService has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.

Earnings & Valuation

This table compares American Realty Investors and FirstService”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Realty Investors	$47.32 million	6.08	-$14.70 million	$0.36	49.51
FirstService	$5.50 billion	1.32	$134.38 million	$3.16	50.22

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

Institutional and Insider Ownership

69.4% of FirstService shares are held by institutional investors. 90.8% of American Realty Investors shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

FirstService beats American Realty Investors on 11 of the 14 factors compared between the two stocks.

About American Realty Investors

American Realty Investors, Inc., together with its subsidiaries, acquires, develops, owns, and manages multifamily and commercial real estate properties in the Southern United States. It operates through two segments, Residential and Commercial. The company leases apartment units to residents; and office, industrial, and retail space to various for-profit businesses, as well as local, state, and federal agencies. It also offers tenant services, including parking and storage space rental; and sells land and properties. The company was incorporated in 1999 and is based in Dallas, Texas. American Realty Investors, Inc. is a subsidiary of Realty Advisors, Inc.

About FirstService

FirstService Corporation, together with its subsidiaries, provides residential property management and other essential property services to residential and commercial customers in the United States and Canada. It operates through two segments: FirstService Residential and FirstService Brands. The FirstService Residential segment offers services for private residential communities, such as condominiums, co-operatives, homeowner associations, master-planned communities, active adult and lifestyle communities, and various other residential developments. This segment provides a range of ancillary services, including on-site staffing for building engineering and maintenance, full-service amenity management, and security and concierge/front desk; and financial services comprising cash management, other banking transaction-related, and specialized property insurance brokerage. In addition, this segment offers energy management solutions and advisory services, and resale processing services. Its FirstService Brands segment operates and provides essential property services to residential and commercial customers through franchise networks; and company-owned operations, including California Closets, Paul Davis Restoration, and CertaPro Painters operations. It provides residential and commercial restoration, painting, and floor coverings design and installation services; custom-designed and installed closet, and home storage solutions; home inspection services; and fire protection and related services. This segment offers its services primarily under the Paul Davis Restoration, Roofing Corp of America, First Onsite property Restoration, Century Fire Protection, CertaPro Painters, California Closets, Pillar to Post Home Inspectors, and Floor Coverings International brand names. FirstService Corporation was incorporated in 1988 and is headquartered in Toronto, Canada.