New Residential Investment (NYSE:NRZ) and Federal Realty Investment Trust (NYSE:FRT) Financial Contrast

New Residential Investment (NYSE:NRZ) and Federal Realty Investment Trust (NYSE:FRT) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, risk, profitability, valuation, dividends and earnings.

Risk and Volatility

New Residential Investment has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, Federal Realty Investment Trust has a beta of 0.46, indicating that its stock price is 54% less volatile than the S&P 500.

Earnings and Valuation

This table compares New Residential Investment and Federal Realty Investment Trust’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
New Residential Investment $1.66 billion 3.76 $963.97 million $2.38 6.33
Federal Realty Investment Trust $915.44 million 11.15 $241.90 million $6.23 21.86

New Residential Investment has higher revenue and earnings than Federal Realty Investment Trust. New Residential Investment is trading at a lower price-to-earnings ratio than Federal Realty Investment Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

New Residential Investment pays an annual dividend of $2.00 per share and has a dividend yield of 13.3%. Federal Realty Investment Trust pays an annual dividend of $4.08 per share and has a dividend yield of 3.0%. New Residential Investment pays out 84.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federal Realty Investment Trust pays out 65.5% of its earnings in the form of a dividend. New Residential Investment has increased its dividend for 5 consecutive years and Federal Realty Investment Trust has increased its dividend for 51 consecutive years.

Profitability

This table compares New Residential Investment and Federal Realty Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
New Residential Investment 17.24% 13.22% 2.57%
Federal Realty Investment Trust 27.82% 11.13% 4.08%

Institutional & Insider Ownership

53.3% of New Residential Investment shares are held by institutional investors. Comparatively, 88.4% of Federal Realty Investment Trust shares are held by institutional investors. 0.5% of New Residential Investment shares are held by company insiders. Comparatively, 0.8% of Federal Realty Investment Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for New Residential Investment and Federal Realty Investment Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
New Residential Investment 0 0 6 0 3.00
Federal Realty Investment Trust 0 3 7 0 2.70

New Residential Investment presently has a consensus target price of $18.70, suggesting a potential upside of 24.17%. Federal Realty Investment Trust has a consensus target price of $142.43, suggesting a potential upside of 4.59%. Given New Residential Investment’s stronger consensus rating and higher possible upside, equities research analysts plainly believe New Residential Investment is more favorable than Federal Realty Investment Trust.

Summary

Federal Realty Investment Trust beats New Residential Investment on 10 of the 17 factors compared between the two stocks.

New Residential Investment Company Profile

New Residential Investment Corp., a real estate investment trust, focuses on investing in and managing residential mortgage related assets in the United States. It operates through Servicing and Originations, Residential Securities and Loans, and Consumer Loans segments. The company invests in excess mortgage servicing rights (MSRs) on residential mortgage loans; and in servicer advances, including the basic fee component of the related MSRs. It also invests in real estate securities and residential mortgage loans, as well as in consumer loans, including unsecured and homeowner loans. The company qualifies as a real estate investment trust for federal income tax purposes. It generally 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 founded in 2011 and is based in New York, New York.

Federal Realty Investment Trust Company Profile

Federal Realty is a recognized leader in the ownership, operation and redevelopment of high-quality retail based properties located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles. Founded in 1962, Federal Realty's mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply. Its expertise includes creating urban, mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland and Assembly Row in Somerville, Massachusetts. These unique and vibrant environments that combine shopping, dining, living and working provide a destination experience valued by their respective communities. Federal Realty's 105 properties include approximately 3,000 tenants, in 24 million square feet, and over 2,600 residential units. Federal Realty has increased its quarterly dividends to its shareholders for 51 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P 500 index member and its shares are traded on the NYSE under the symbol FRT.

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