The RMR Group (NASDAQ:RMR) and Newmark Group (NASDAQ:NMRK) Critical Analysis

Newmark Group (NASDAQ:NMRK) and The RMR Group (NASDAQ:RMR) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, valuation, profitability, institutional ownership, risk, analyst recommendations and earnings.

Insider & Institutional Ownership

58.4% of Newmark Group shares are held by institutional investors. Comparatively, 42.3% of The RMR Group shares are held by institutional investors. 3.1% of Newmark Group shares are held by insiders. Comparatively, 54.7% of The RMR Group 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.

Analyst Recommendations

This is a breakdown of current ratings for Newmark Group and The RMR Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Newmark Group	0	2	6	0	2.75
The RMR Group	1	1	2	0	2.25

Newmark Group presently has a consensus target price of $17.80, indicating a potential upside of 21.67%. The RMR Group has a consensus target price of $19.00, indicating a potential upside of 21.95%. Given The RMR Group’s higher probable upside, analysts clearly believe The RMR Group is more favorable than Newmark Group.

Dividends

Newmark Group pays an annual dividend of $0.12 per share and has a dividend yield of 0.8%. The RMR Group pays an annual dividend of $1.80 per share and has a dividend yield of 11.6%. Newmark Group pays out 17.6% of its earnings in the form of a dividend. The RMR Group pays out 130.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. The RMR Group has increased its dividend for 1 consecutive years. The RMR Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Newmark Group and The RMR Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Newmark Group	3.83%	24.97%	7.74%
The RMR Group	3.52%	4.03%	2.44%

Risk and Volatility

Newmark Group has a beta of 1.84, meaning that its stock price is 84% more volatile than the S&P 500. Comparatively, The RMR Group has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500.

Valuation and Earnings

This table compares Newmark Group and The RMR Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Newmark Group	$3.29 billion	0.82	$126.19 million	$0.68	21.51
The RMR Group	$700.28 million	0.71	$17.60 million	$1.38	11.29

Newmark Group has higher revenue and earnings than The RMR Group. The RMR Group is trading at a lower price-to-earnings ratio than Newmark Group, indicating that it is currently the more affordable of the two stocks.

Summary

Newmark Group beats The RMR Group on 12 of the 17 factors compared between the two stocks.

About Newmark Group

Newmark Group, Inc. provides commercial real estate services in the United States, the United Kingdom, and internationally. The company offers capital markets consisting of investment sales and commercial mortgage brokerage; landlord or agency representation leasing; valuation and advisory; property management; commercial real estate technology platform and capabilities; the United Kingdom business rates services; due diligence, consulting, and other advisory services; GSEs and the Federal Housing Administration lending services comprising multifamily lending and loan servicing; asset management; and flexible workspace solutions for owners. It also provides tenant representation leasing; and global corporate services consisting of workplace and occupancy strategy, energy and sustainability services, technology, project management, real estate and lease administration, and facilities management. The company offers its services to commercial real estate tenants, investors, owners, occupiers, and developers; lenders; small and medium size businesses; and multi-national corporations. The company was formerly known as Newmark Grubb Knight Frank Capital Group and changed its name to Newmark Group, Inc. in October 2017. Newmark Group, Inc. was founded in 1929 and is based in New York, New York. Newmark Group, Inc.operates is a subsidiary of Cantor Fitzgerald, L.P.

About The RMR Group

The RMR Group Inc., through its subsidiary, The RMR Group LLC, provides asset management services in the United States. The company offers management services to its four publicly traded real estate investment trusts, three real estate operating companies, and private capital vehicles. It also provides advisory services to publicly traded mortgage real estate investment trust. The company was formerly known as REIT Management & Research Inc. and changed its name to The RMR Group Inc. in October 2015. The RMR Group Inc. was founded in 1986 and is headquartered in Newton, Massachusetts.