Ready Capital (NYSE:RC) vs. Paramount Group (NYSE:PGRE) Financial Review

Paramount Group (NYSE:PGRE) and Ready Capital (NYSE:RC) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, dividends and profitability.

Earnings and Valuation

This table compares Paramount Group and Ready Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Paramount Group	$742.79 million	1.47	-$259.74 million	($1.16)	-4.33
Ready Capital	$945.81 million	1.41	$339.45 million	$1.61	4.94

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

Dividends

Paramount Group pays an annual dividend of $0.14 per share and has a dividend yield of 2.8%. Ready Capital pays an annual dividend of $1.20 per share and has a dividend yield of 15.1%. Paramount Group pays out -12.1% of its earnings in the form of a dividend. Ready Capital pays out 74.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Volatility and Risk

Paramount Group has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500. Comparatively, Ready Capital has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Paramount Group and Ready Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paramount Group	2	2	1	0	1.80
Ready Capital	1	6	1	0	2.00

Paramount Group presently has a consensus price target of $4.70, suggesting a potential downside of 6.37%. Ready Capital has a consensus price target of $9.38, suggesting a potential upside of 17.92%. Given Ready Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Ready Capital is more favorable than Paramount Group.

Institutional & Insider Ownership

65.6% of Paramount Group shares are owned by institutional investors. Comparatively, 55.9% of Ready Capital shares are owned by institutional investors. 13.5% of Paramount Group shares are owned by insiders. Comparatively, 1.1% of Ready Capital 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.

Profitability

This table compares Paramount Group and Ready Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Paramount Group	-27.96%	-5.15%	-2.64%
Ready Capital	-5.67%	7.32%	1.46%

Summary

Ready Capital beats Paramount Group on 11 of the 15 factors compared between the two stocks.

About Paramount Group

Paramount Group, Inc. ("Paramount" or the "Company") is a fully-integrated real estate investment trust that owns, operates, manages, acquires and redevelops high-quality, Class A office properties located in select central business district submarkets of New York and San Francisco. Paramount is focused on maximizing the value of its portfolio by leveraging the sought-after locations of its assets and its proven property management capabilities to attract and retain high-quality tenants.

About Ready Capital

Ready Capital Corporation operates as a real estate finance company in the United States. It operates through two segments: LMM Commercial Real Estate and Small Business Lending. The company originates, acquires, finances, and services lower-to-middle-market (LLM) commercial real estate loans, small business administration (SBA) loans, residential mortgage loans, construction loans, and mortgage-backed securities collateralized primarily by LLM loans, or other real estate-related investments. The LMM Commercial Real Estate segment originates LLM loans across the full life-cycle of an LLM property, including construction, bridge, stabilized, and agency loan origination channels. The Small Business Lending segment acquires, originates, and services owner-occupied loans guaranteed by the SBA under its SBA Section 7(a) Program; and acquires purchased future receivables. The company has elected to be taxed as a real estate investment trust (REIT) and 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 Sutherland Asset Management Corporation and changed its name to Ready Capital Corporation in September 2018. Ready Capital Corporation was founded in 2007 and is headquartered in New York, New York.