Rithm Capital (NYSE:RITM) and Broadstone Net Lease (NYSE:BNL) Critical Analysis

Rithm Capital (NYSE:RITM) and Broadstone Net Lease (NYSE:BNL) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Dividends

Rithm Capital pays an annual dividend of $1.00 per share and has a dividend yield of 9.4%. Broadstone Net Lease pays an annual dividend of $1.14 per share and has a dividend yield of 7.8%. Rithm Capital pays out 90.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Broadstone Net Lease pays out 139.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Broadstone Net Lease has increased its dividend for 2 consecutive years. Rithm Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Rithm Capital and Broadstone Net Lease’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rithm Capital	$3.80 billion	1.35	$622.26 million	$1.10	9.64
Broadstone Net Lease	$442.89 million	6.22	$155.48 million	$0.82	17.89

Rithm Capital has higher revenue and earnings than Broadstone Net Lease. Rithm Capital is trading at a lower price-to-earnings ratio than Broadstone Net Lease, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Rithm Capital has a beta of 1.82, indicating that its stock price is 82% more volatile than the S&P 500. Comparatively, Broadstone Net Lease has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500.

Profitability

This table compares Rithm Capital and Broadstone Net Lease’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rithm Capital	17.15%	18.49%	3.20%
Broadstone Net Lease	35.10%	4.80%	2.92%

Institutional & Insider Ownership

44.9% of Rithm Capital shares are held by institutional investors. Comparatively, 89.1% of Broadstone Net Lease shares are held by institutional investors. 0.6% of Rithm Capital shares are held by insiders. Comparatively, 0.6% of Broadstone Net Lease shares are held by 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.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Rithm Capital and Broadstone Net Lease, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rithm Capital	0	0	8	0	3.00
Broadstone Net Lease	1	3	1	0	2.00

Rithm Capital currently has a consensus price target of $12.00, suggesting a potential upside of 13.21%. Broadstone Net Lease has a consensus price target of $16.75, suggesting a potential upside of 14.18%. Given Broadstone Net Lease’s higher possible upside, analysts plainly believe Broadstone Net Lease is more favorable than Rithm Capital.

Summary

Rithm Capital beats Broadstone Net Lease on 10 of the 16 factors compared between the two stocks.

About Rithm Capital

Rithm Capital Corp. operates as an asset manager focused on real estate, credit, and financial services. It operates through Origination and Servicing, Investment Portfolio, Mortgage Loans Receivable, and Asset Management segments. Its investment portfolio primarily comprises of mortgage servicing rights (MSR), and MSR financing receivables, title, appraisal and property preservation, excess MSRs, and services advance investments; real estate securities, call rights, SFR properties, and residential mortgage loans; consumer and business purpose loans; and asset management related investments. 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 formerly known as New Residential Investment Corp. and changed its name to Rithm Capital Corp. in August 2022. Rithm Capital Corp. was incorporated in 2011 and is based in New York, New York.

About Broadstone Net Lease

BNL is an industrial-focused, diversified net lease REIT that acquires, owns, and manages primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. Utilizing an investment strategy underpinned by strong fundamental credit analysis and prudent real estate underwriting, as of September 30, 2023, BNL's diversified portfolio consisted of 800 individual net leased commercial properties with 793 properties located in 44 U.S. states and seven properties located in four Canadian provinces across the industrial, healthcare, restaurant, retail, and office property types.