Critical Contrast: Fathom (NASDAQ:FTHM) versus The RMR Group (NASDAQ:RMR)

The RMR Group (NASDAQ:RMR) and Fathom (NASDAQ:FTHM) are both small-cap real estate companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for The RMR Group and Fathom, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The RMR Group	0	2	3	0	2.60
Fathom	1	0	0	1	2.50

The RMR Group presently has a consensus target price of $21.33, indicating a potential upside of 35.45%. Fathom has a consensus target price of $2.50, indicating a potential upside of 1,614.68%. Given Fathom’s higher probable upside, analysts clearly believe Fathom is more favorable than The RMR Group.

Insider & Institutional Ownership

42.3% of The RMR Group shares are owned by institutional investors. Comparatively, 55.5% of Fathom shares are owned by institutional investors. 54.7% of The RMR Group shares are owned by insiders. Comparatively, 16.4% of Fathom shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

The RMR Group has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500. Comparatively, Fathom has a beta of 2.41, suggesting that its stock price is 141% more volatile than the S&P 500.

Earnings & Valuation

This table compares The RMR Group and Fathom”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The RMR Group	$638.98 million	0.79	$17.60 million	$1.14	13.82
Fathom	$420.48 million	0.01	-$20.31 million	($0.80)	-0.18

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
The RMR Group	3.10%	2.96%	1.71%
Fathom	-6.27%	-75.89%	-33.25%

Summary

The RMR Group beats Fathom on 11 of the 15 factors compared between the two stocks.

About The RMR Group

The RMR Group Inc. is a U.S.-based alternative asset management company that provides management services to real estate and related businesses. Its clients include publicly traded real estate investment trusts, real estate operating companies and private capital vehicles. RMR’s services include property and business management, asset management, leasing, acquisitions and dispositions, financing, development and advisory support. The businesses it manages operate across a range of real estate sectors, including senior living, healthcare, office, industrial and retail.

About Fathom

Fathom Holdings Inc. is a technology-driven real estate services company that operates primarily through its Fathom Realty brokerage. The company provides residential real estate brokerage services through a network of independent agents who assist clients with buying, selling and leasing properties. Fathom Realty supports its agents with a cloud-based platform that includes transaction management, marketing, lead generation, training and other business tools. The company has also expanded its offerings into related real estate services, including title and settlement services, insurance and technology solutions designed to support real estate professionals and consumers.