Howard Hughes (NYSE: HHC) and The RMR Group (NASDAQ:RMR) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Risk & Volatility

Howard Hughes has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500. Comparatively, The RMR Group has a beta of -0.73, meaning that its share price is 173% less volatile than the S&P 500.

Valuation & Earnings

This table compares Howard Hughes and The RMR Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Howard Hughes $1.04 billion 5.19 $202.30 million $1.46 85.04
The RMR Group $266.94 million 3.34 $37.24 million $2.78 21.22

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

Profitability

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

Net Margins Return on Equity Return on Assets
Howard Hughes 5.83% 3.27% 1.40%
The RMR Group 16.44% 10.14% 7.43%

Analyst Recommendations

This is a breakdown of recent ratings for Howard Hughes and The RMR Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Howard Hughes 0 1 1 0 2.50
The RMR Group 0 3 2 0 2.40

Howard Hughes presently has a consensus target price of $136.50, indicating a potential upside of 9.94%. The RMR Group has a consensus target price of $59.50, indicating a potential upside of 0.85%. Given Howard Hughes’ stronger consensus rating and higher possible upside, research analysts plainly believe Howard Hughes is more favorable than The RMR Group.

Dividends

The RMR Group pays an annual dividend of $1.00 per share and has a dividend yield of 1.7%. Howard Hughes does not pay a dividend. The RMR Group pays out 36.0% of its earnings in the form of a dividend.

Insider and Institutional Ownership

85.3% of Howard Hughes shares are held by institutional investors. Comparatively, 34.5% of The RMR Group shares are held by institutional investors. 20.7% of Howard Hughes shares are held by company insiders. Comparatively, 55.3% of The RMR Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Howard Hughes beats The RMR Group on 9 of the 16 factors compared between the two stocks.

Howard Hughes Company Profile

The Howard Hughes Corporation is a developer of master planned communities and mixed use properties. The Company is engaged in the ownership, management and the redevelopment or repositioning of real estate assets, as well as other real estate opportunities in the form of entitled and unentitled land and other development rights, also called Strategic Developments. It operates through three segments: Master Planned Communities, Operating Assets and Strategic Developments. Its Master Planned Communities segment consists of the development and sale of residential land and the development of commercial land to hold, develop or sell. Its master planned communities include The Woodlands, Summerlin, Maryland, Bridgeland and The Woodlands Hills. As of December 31, 2016, its Operating Assets segment included 54 properties, investments and other assets. As of December 31, 2016, the Strategic Developments segment included 23 development projects.

The RMR Group Company Profile

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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