The RMR Group (NASDAQ:RMR) and FirstService (NASDAQ:FSV) Critical Survey

FirstService (NASDAQ:FSV) and The RMR Group (NASDAQ:RMR) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, valuation, dividends, profitability and analyst recommendations.

Earnings & Valuation

This table compares FirstService and The RMR Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FirstService	$5.48 billion	1.28	$134.38 million	$3.02	50.70
The RMR Group	$700.28 million	0.70	$23.13 million	$1.05	14.56

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for FirstService and The RMR Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FirstService	0	2	6	0	2.75
The RMR Group	1	0	0	1	2.50

FirstService presently has a consensus target price of $211.83, indicating a potential upside of 38.34%. The RMR Group has a consensus target price of $24.00, indicating a potential upside of 56.97%. Given The RMR Group’s higher possible upside, analysts plainly believe The RMR Group is more favorable than FirstService.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
FirstService	2.53%	17.98%	5.21%
The RMR Group	2.56%	5.01%	3.10%

Risk and Volatility

FirstService has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500. Comparatively, The RMR Group has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.

Institutional and Insider Ownership

69.3% of FirstService shares are owned by institutional investors. Comparatively, 42.3% of The RMR Group shares are owned by institutional investors. 54.8% of The RMR Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

FirstService pays an annual dividend of $1.10 per share and has a dividend yield of 0.7%. The RMR Group pays an annual dividend of $1.80 per share and has a dividend yield of 11.8%. FirstService pays out 36.4% of its earnings in the form of a dividend. The RMR Group pays out 171.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FirstService has raised its dividend for 7 consecutive years and The RMR Group has raised its dividend for 1 consecutive years.

Summary

FirstService beats The RMR Group on 12 of the 18 factors compared between the two stocks.

About FirstService

FirstService Corporation, together with its subsidiaries, provides residential property management and other essential property services to residential and commercial customers in the United States and Canada. It operates through two segments: FirstService Residential and FirstService Brands. The FirstService Residential segment offers services for private residential communities, such as condominiums, co-operatives, homeowner associations, master-planned communities, active adult and lifestyle communities, and various other residential developments. This segment provides a range of ancillary services, including on-site staffing for building engineering and maintenance, full-service amenity management, and security and concierge/front desk; and financial services comprising cash management, other banking transaction-related, and specialized property insurance brokerage. In addition, this segment offers energy management solutions and advisory services, and resale processing services. Its FirstService Brands segment operates and provides essential property services to residential and commercial customers through franchise networks; and company-owned operations, including California Closets, Paul Davis Restoration, and CertaPro Painters operations. It provides residential and commercial restoration, painting, and floor coverings design and installation services; custom-designed and installed closet, and home storage solutions; home inspection services; and fire protection and related services. This segment offers its services primarily under the Paul Davis Restoration, Roofing Corp of America, First Onsite property Restoration, Century Fire Protection, CertaPro Painters, California Closets, Pillar to Post Home Inspectors, and Floor Coverings International brand names. FirstService Corporation was incorporated in 1988 and is headquartered in Toronto, Canada.

About The RMR Group

The RMR Group Inc., through its subsidiary, The RMR Group LLC, provides asset management services in the United States. The company offers management services to its four publicly traded real estate investment trusts, three real estate operating companies, and private capital vehicles. It also provides advisory services to publicly traded mortgage real estate investment trust. The company was formerly known as REIT Management & Research Inc. and changed its name to The RMR Group Inc. in October 2015. The RMR Group Inc. was founded in 1986 and is headquartered in Newton, Massachusetts.