Critical Survey: Investors Real Estate Trust (IRET) & Sutherland Asset Management Corp. (NYSE:SLD)

Investors Real Estate Trust (NYSE: IRET) and Sutherland Asset Management Corp. (NYSE:SLD) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, dividends, valuation and profitabiliy.

Profitability

This table compares Investors Real Estate Trust and Sutherland Asset Management Corp.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Investors Real Estate Trust	21.07%	-2.51%	-0.80%
Sutherland Asset Management Corp.	42.38%	8.82%	1.96%

Risk & Volatility

Investors Real Estate Trust has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500. Comparatively, Sutherland Asset Management Corp. has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500.

Dividends

Investors Real Estate Trust pays an annual dividend of $0.28 per share and has a dividend yield of 4.5%. Sutherland Asset Management Corp. pays an annual dividend of $1.48 per share and has a dividend yield of 10.1%. Investors Real Estate Trust pays out 107.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sutherland Asset Management Corp. pays out 77.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sutherland Asset Management Corp. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Investors Real Estate Trust and Sutherland Asset Management Corp.’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Investors Real Estate Trust	$205.74 million	3.63	$99.75 million	$0.26	23.81
Sutherland Asset Management Corp.	$103.09 million	4.37	$59.18 million	$1.92	7.60

Investors Real Estate Trust has higher revenue and earnings than Sutherland Asset Management Corp.. Sutherland Asset Management Corp. is trading at a lower price-to-earnings ratio than Investors Real Estate Trust, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

52.9% of Investors Real Estate Trust shares are held by institutional investors. Comparatively, 28.4% of Sutherland Asset Management Corp. shares are held by institutional investors. 1.3% of Investors Real Estate Trust shares are held by insiders. Comparatively, 2.4% of Sutherland Asset Management Corp. shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Investors Real Estate Trust and Sutherland Asset Management Corp., as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Investors Real Estate Trust	0	2	1	0	2.33
Sutherland Asset Management Corp.	0	0	0	0	N/A

Investors Real Estate Trust currently has a consensus target price of $6.18, suggesting a potential downside of 0.11%. Sutherland Asset Management Corp. has a consensus target price of $15.50, suggesting a potential upside of 6.16%. Given Sutherland Asset Management Corp.’s higher probable upside, analysts plainly believe Sutherland Asset Management Corp. is more favorable than Investors Real Estate Trust.

Summary

Sutherland Asset Management Corp. beats Investors Real Estate Trust on 9 of the 15 factors compared between the two stocks.

About Investors Real Estate Trust

Investors Real Estate Trust is a self-advised equity real estate investment trust (REIT). The Company’s business consists of owning and operating income-producing real estate properties. Its segments include Multifamily, Healthcare and All Other. Its investments consist of multifamily and healthcare properties located primarily in the upper Midwest states of Minnesota and North Dakota. It conducts its business operations through its operating partnership, IRET Properties, which is principally engaged in acquiring, owning, operating and leasing real estate. It invests in multifamily properties and commercial properties that are leased to single or multiple tenants, usually for approximately five years or longer. As of May 26, 2017, the Company held for investment 86 multifamily properties containing 12,813 apartment units and 44 commercial properties, consisting of healthcare, industrial, office and retail, containing approximately 2.7 million square feet of leasable space.

About Sutherland Asset Management Corp.

Sutherland Asset Management Corporation, formerly ZAIS Financial Corp., is a diversified mortgage real estate investment trust (REIT). The Company originates, acquires, finances, services and manages small balance commercial loans (SBC) and Small Business Administration (SBA) loans. The Company focuses on maintaining its existing residential mortgage origination platform, GMFS. The Company originates SBC and SBA loans through its ReadyCap subsidiaries. The Company also invests in asset-backed securities, where the underlying pool of assets consists primarily of SBC loans, and other real estate-related investments. The Company is managed and advised by Waterfall Asset Management, LLC.