Critical Comparison: iStar Financial (STAR) and Manhattan Bridge Capital (LOAN)

iStar Financial (NYSE: STAR) and Manhattan Bridge Capital (NASDAQ:LOAN) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, profitability, institutional ownership, risk, analyst recommendations and earnings.

Profitability

This table compares iStar Financial and Manhattan Bridge Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
iStar Financial 32.82% 22.21% 4.79%
Manhattan Bridge Capital 59.95% 13.39% 8.37%

Earnings and Valuation

This table compares iStar Financial and Manhattan Bridge Capital’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
iStar Financial $626.30 million 1.30 $243.53 million $1.83 6.16
Manhattan Bridge Capital $4.21 million 11.16 $3.08 million $0.38 15.26

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

Institutional & Insider Ownership

83.5% of iStar Financial shares are owned by institutional investors. Comparatively, 11.4% of Manhattan Bridge Capital shares are owned by institutional investors. 4.4% of iStar Financial shares are owned by insiders. Comparatively, 32.3% of Manhattan Bridge Capital shares are owned 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.

Dividends

Manhattan Bridge Capital pays an annual dividend of $0.41 per share and has a dividend yield of 7.1%. iStar Financial does not pay a dividend. Manhattan Bridge Capital pays out 107.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of recent ratings for iStar Financial and Manhattan Bridge Capital, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
iStar Financial 0 2 0 0 2.00
Manhattan Bridge Capital 0 0 1 0 3.00

iStar Financial presently has a consensus target price of $14.00, suggesting a potential upside of 24.22%. Manhattan Bridge Capital has a consensus target price of $7.25, suggesting a potential upside of 25.00%. Given Manhattan Bridge Capital’s stronger consensus rating and higher probable upside, analysts clearly believe Manhattan Bridge Capital is more favorable than iStar Financial.

Volatility and Risk

iStar Financial has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500. Comparatively, Manhattan Bridge Capital has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.

Summary

Manhattan Bridge Capital beats iStar Financial on 9 of the 16 factors compared between the two stocks.

About iStar Financial

iStar Inc. finances, invests in and develops real estate and real estate related projects as part of its integrated investment platform. The Company’s four business segments are Real Estate Finance, Net Lease, Operating Properties, and Land and Development. The Real Estate Finance portfolio consists of senior and mezzanine real estate loans that may be either fixed-rate or variable-rate. The Net Lease portfolio consists of properties owned by the Company and leased to single tenants, where the properties are subject to long-term leases. The Operating Properties portfolio consists of commercial and residential properties, which represent a pool of assets across a range of geographies and property types. The Land and Development portfolio consists of land entitled for master planned communities, as well as waterfront and urban infill land parcels located throughout the United States. Its Land and Development projects include Great Oaks, Sage Scottsdale, Naples Reserve and Coney Island.

About Manhattan Bridge Capital

Manhattan Bridge Capital, Inc. (MBC) is a real estate finance company that specializes in originating, servicing and managing a portfolio of first mortgage loans. The Company offers short-term, secured, non-banking loans to real estate investors to fund their acquisition, renovation, rehabilitation or improvement of properties located in the New York metropolitan area. Its primary business objective is to grow its loan portfolio while protecting and preserving capital in a manner that provides for risk-adjusted returns to its shareholders over the long term through dividends. It intends to achieve this objective by continuing to selectively originate, fund loans secured by first mortgages on residential real estate held for investment located in the New York metropolitan area, and to manage and service its portfolio in a manner designed to generate risk-adjusted returns across a range of market conditions and economic cycles. Its loan portfolio includes various construction loans.

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