Stratus Properties (NASDAQ:STRS – Get Free Report) and Forestar Group (NYSE:FOR – Get Free Report) are both small-cap real estate companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, dividends and valuation.
Analyst Ratings
This is a breakdown of current ratings and recommmendations for Stratus Properties and Forestar Group, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Stratus Properties | 1 | 0 | 0 | 0 | 1.00 |
| Forestar Group | 0 | 4 | 2 | 0 | 2.33 |
Forestar Group has a consensus price target of $32.67, suggesting a potential upside of 31.23%. Given Forestar Group’s stronger consensus rating and higher probable upside, analysts clearly believe Forestar Group is more favorable than Stratus Properties.
Profitability
This table compares Stratus Properties and Forestar Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Stratus Properties | 74.96% | 6.28% | 3.83% |
| Forestar Group | 9.88% | 9.42% | 5.36% |
Earnings and Valuation
This table compares Stratus Properties and Forestar Group”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Stratus Properties | $28.66 million | 4.85 | $11.98 million | $2.64 | 6.58 |
| Forestar Group | $1.72 billion | 0.74 | $167.90 million | $3.33 | 7.48 |
Forestar Group has higher revenue and earnings than Stratus Properties. Stratus Properties is trading at a lower price-to-earnings ratio than Forestar Group, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
61.6% of Stratus Properties shares are held by institutional investors. Comparatively, 35.5% of Forestar Group shares are held by institutional investors. 10.0% of Stratus Properties shares are held by insiders. Comparatively, 0.5% of Forestar Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Volatility & Risk
Stratus Properties has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500. Comparatively, Forestar Group has a beta of 1.4, suggesting that its share price is 40% more volatile than the S&P 500.
Summary
Forestar Group beats Stratus Properties on 10 of the 14 factors compared between the two stocks.
About Stratus Properties
Stratus Properties Inc., a real estate company, engages in the entitlement, development, management, leasing, and sale of multi and single family residential and commercial real estate properties in the Austin, Texas area and other select markets in Texas. The company operates in two segments, Real Estate Operations and Leasing Operations. Its leasing operations cover lease of space at retail and mixed-use and multi-family properties. The company was incorporated in 1992 and is headquartered in Austin, Texas.
About Forestar Group
Forestar Group Inc. operates as a residential lot development company in the United States. The company acquires land and develops infrastructure for single-family residential communities. It sells its residential single-family finished lots to local, regional, and national homebuilders. The company was incorporated in 2005 and is headquartered in Arlington, Texas. Forestar Group Inc. operates as a subsidiary of D.R. Horton, Inc.
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