Forestar Group (NYSE: FOR) and Transcontinental Realty Investors (NYSE:TCI) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitabiliy, analyst recommendations, dividends and valuation.
Volatility & Risk
Forestar Group has a beta of 1.95, meaning that its stock price is 95% more volatile than the S&P 500. Comparatively, Transcontinental Realty Investors has a beta of -0.14, meaning that its stock price is 114% less volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Forestar Group and Transcontinental Realty Investors, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Transcontinental Realty Investors||0||3||0||0||2.00|
Transcontinental Realty Investors has a consensus price target of $20.33, suggesting a potential downside of 27.61%. Given Transcontinental Realty Investors’ higher possible upside, analysts plainly believe Transcontinental Realty Investors is more favorable than Forestar Group.
Earnings & Valuation
This table compares Forestar Group and Transcontinental Realty Investors’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Forestar Group||$182.00 million||4.00||$44.26 million||$2.08||8.37|
|Transcontinental Realty Investors||$121.07 million||2.02||$43.45 million||($0.28)||-100.32|
Forestar Group has higher revenue and earnings than Transcontinental Realty Investors. Transcontinental Realty Investors is trading at a lower price-to-earnings ratio than Forestar Group, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
86.7% of Forestar Group shares are held by institutional investors. Comparatively, 0.3% of Transcontinental Realty Investors shares are held by institutional investors. 3.1% of Forestar Group shares are held by company insiders. Comparatively, 81.0% of Transcontinental Realty Investors shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This table compares Forestar Group and Transcontinental Realty Investors’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Transcontinental Realty Investors||-1.29%||-0.70%||-0.13%|
Forestar Group beats Transcontinental Realty Investors on 9 of the 11 factors compared between the two stocks.
About Forestar Group
Forestar Group Inc. is a residential and mixed-use real estate development company. The Company operates through three segments. The Real Estate segment secures entitlements and develops infrastructure on its lands, for single-family residential and mixed-use communities. The Mineral resources segment is focused on its owned oil and gas mineral interests through promoting exploration, development and production activities. The Other segment manages its timber holdings, recreational leases and water resource initiatives. As of December 31, 2016, its core community development business had directly or through ventures interests in 50 residential and mixed-use projects consisting of 4,600 acres of real estate located in 10 states and 14 markets. As of December 31, 2016, its non-core assets included approximately 523,000 net acres of owned mineral assets, 19,000 acres of timberland and undeveloped land, four multifamily assets and approximately 20,000 acres of groundwater leases.
About Transcontinental Realty Investors
Transcontinental Realty Investors, Inc. is an externally advised and managed real estate investment company that owns a portfolio of income-producing properties and land held for development. The Company’s segments are Commercial Properties, Apartments, Land and Other. Its portfolio of income-producing properties includes residential apartment communities, office buildings and other commercial properties. It acquires land mainly in in-fill locations or suburban markets. The Company’s income-producing properties consist of approximately eight commercial properties, including five office buildings, two retail properties and an industrial warehouse, comprising in aggregate approximately 1.9 million square feet; a golf course comprising approximately 96.09 acres, and approximately 50 residential apartment communities comprising over 7,980 units, excluding apartments being developed. In addition, it owns approximately 3,660 acres of land held for development.
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