Critical Review: CTO Realty Growth (NYSE:CTO) vs. BrightSpire Capital (NYSE:BRSP)

CTO Realty Growth (NYSE:CTO) and BrightSpire Capital (NYSE:BRSP) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, institutional ownership, risk, dividends, analyst recommendations and profitability.

Analyst Ratings

This is a breakdown of current recommendations for CTO Realty Growth and BrightSpire Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CTO Realty Growth	0	0	2	2	3.50
BrightSpire Capital	1	3	1	0	2.00

CTO Realty Growth presently has a consensus target price of $21.00, indicating a potential upside of 8.25%. BrightSpire Capital has a consensus target price of $7.00, indicating a potential upside of 20.07%. Given BrightSpire Capital’s higher probable upside, analysts plainly believe BrightSpire Capital is more favorable than CTO Realty Growth.

Dividends

CTO Realty Growth pays an annual dividend of $1.52 per share and has a dividend yield of 7.8%. BrightSpire Capital pays an annual dividend of $0.64 per share and has a dividend yield of 11.0%. CTO Realty Growth pays out 257.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BrightSpire Capital pays out -62.7% of its earnings in the form of a dividend. BrightSpire Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

67.2% of CTO Realty Growth shares are owned by institutional investors. Comparatively, 56.6% of BrightSpire Capital shares are owned by institutional investors. 5.3% of CTO Realty Growth shares are owned by insiders. Comparatively, 1.9% of BrightSpire Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares CTO Realty Growth and BrightSpire Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CTO Realty Growth	17.10%	4.04%	1.92%
BrightSpire Capital	-69.35%	9.44%	2.79%

Valuation and Earnings

This table compares CTO Realty Growth and BrightSpire Capital”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CTO Realty Growth	$118.66 million	4.90	$5.53 million	$0.59	32.88
BrightSpire Capital	$364.80 million	2.07	-$15.55 million	($1.02)	-5.72

CTO Realty Growth has higher earnings, but lower revenue than BrightSpire Capital. BrightSpire Capital is trading at a lower price-to-earnings ratio than CTO Realty Growth, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

CTO Realty Growth has a beta of 0.77, indicating that its share price is 23% less volatile than the S&P 500. Comparatively, BrightSpire Capital has a beta of 1.87, indicating that its share price is 87% more volatile than the S&P 500.

Summary

CTO Realty Growth beats BrightSpire Capital on 10 of the 17 factors compared between the two stocks.

About CTO Realty Growth

CTO Realty Growth, Inc. is a publicly traded real estate investment trust that owns and operates a portfolio of high-quality, retail-based properties located primarily in higher growth markets in the United States. CTO also externally manages and owns a meaningful interest in Alpine Income Property Trust, Inc. (NYSE: PINE), a publicly traded net lease REIT.

About BrightSpire Capital

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States and Europe. The company operates through Senior and Mezzanine Loans and Preferred Equity; Net Leased and Other Real Estate; and Corporate and Other segments. It focuses on originating, acquiring, financing, and managing a diversified portfolio of CRE debt investments consisting of first mortgage loans, senior loans, debt securities, mezzanine loans, and preferred equity investments, as well as net leased properties. The company qualifies as a real estate investment trust for federal income tax purposes. It generally 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 Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.