Transcontinental Realty Investors (NYSE: TCI) and RMR Group (NYSE:RMR) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, valuation, profitability, dividends and risk.

Earnings and Valuation

This table compares Transcontinental Realty Investors and RMR Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Transcontinental Realty Investors $121.84 million 1.60 $44.57 million ($2.01) -11.14
RMR Group $230.67 million 3.39 $154.37 million N/A N/A

RMR Group has higher revenue and earnings than Transcontinental Realty Investors.

Profitability

This table compares Transcontinental Realty Investors and RMR Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Transcontinental Realty Investors -13.64% -7.61% -1.38%
RMR Group 32.69% 19.25% 18.06%

Analyst Ratings

This is a summary of current ratings for Transcontinental Realty Investors and RMR Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Transcontinental Realty Investors 0 3 0 0 2.00
RMR Group 0 2 2 0 2.50

Transcontinental Realty Investors currently has a consensus price target of $20.33, suggesting a potential downside of 9.23%. RMR Group has a consensus price target of $58.00, suggesting a potential upside of 19.22%. Given RMR Group’s stronger consensus rating and higher possible upside, analysts plainly believe RMR Group is more favorable than Transcontinental Realty Investors.

Insider & Institutional Ownership

2.1% of Transcontinental Realty Investors shares are owned by institutional investors. 81.0% of Transcontinental Realty Investors shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

RMR Group beats Transcontinental Realty Investors on 9 of the 11 factors compared between the two stocks.

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.

About RMR Group

The RMR Group Inc. is a holding company. The Company’s business is primarily conducted by its subsidiary, The RMR Group LLC (RMR LLC). The Company’s segments include RMR LLC and All Other Operations. RMR LLC manages a portfolio of publicly owned real estate and real estate related businesses. RMR LLC manages Government Properties Income Trust, a real estate investment trust (REIT) that primarily owns properties that are leased to government tenants; Hospitality Properties Trust, an REIT that primarily owns hotels and travel centers; Select Income REIT, an REIT that primarily owns properties leased to single tenants across the United States and leased lands in Hawaii, and Senior Housing Properties Trust, an REIT that primarily owns senior living communities and medical office buildings. As of June 30, 2016, RMR LLC managed over 1,300 properties, which were located in 48 states, Washington, District of Columbia, Puerto Rico and Canada.

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