Lument Finance Trust (NYSE:LFT) vs. Ready Capital (NYSE:RC) Financial Contrast

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

Institutional and Insider Ownership

55.9% of Ready Capital shares are owned by institutional investors. Comparatively, 19.5% of Lument Finance Trust shares are owned by institutional investors. 1.4% of Ready Capital shares are owned by insiders. Comparatively, 3.3% of Lument Finance Trust shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Ready Capital and Lument Finance Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ready Capital	2	3	0	0	1.60
Lument Finance Trust	1	0	0	0	1.00

Ready Capital currently has a consensus price target of $1.50, suggesting a potential upside of 33.33%. Given Ready Capital’s stronger consensus rating and higher probable upside, research analysts clearly believe Ready Capital is more favorable than Lument Finance Trust.

Valuation & Earnings

This table compares Ready Capital and Lument Finance Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ready Capital	$569.17 million	0.33	-$228.91 million	($3.47)	-0.32
Lument Finance Trust	$79.00 million	0.30	-$2.74 million	($3.60)	-1.26

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

Volatility and Risk

Ready Capital has a beta of 1.55, indicating that its stock price is 55% more volatile than the S&P 500. Comparatively, Lument Finance Trust has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Profitability

This table compares Ready Capital and Lument Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ready Capital	-131.76%	-16.78%	-3.43%
Lument Finance Trust	-18.00%	0.86%	0.12%

Summary

Ready Capital beats Lument Finance Trust on 7 of the 12 factors compared between the two stocks.

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.

About Lument Finance Trust

Lument Finance Trust, Inc., a real estate investment trust, focuses on investing in, financing, and managing a portfolio of commercial real estate (CRE) debt investments in the United States. The company primarily invests in transitional floating rate CRE mortgage loans on middle market multi-family assets; and other CRE -related investments, including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans, and other CRE debt instruments. Lument Finance Trust, Inc. is qualified as a real estate investment trust (REIT) under the Internal Revenue Code of 1986. As a REIT, it would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Hunt Companies Finance Trust, Inc. and changed its name to Lument Finance Trust, Inc. in December 2020. Lument Finance Trust, Inc. was incorporated in 2012 and is headquartered in New York, New York.