Head to Head Contrast: Braemar Hotels & Resorts (NYSE:BHR) vs. Franklin BSP Realty Trust (NYSE:FBRT)

Franklin BSP Realty Trust (NYSE:FBRT) and Braemar Hotels & Resorts (NYSE:BHR) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Franklin BSP Realty Trust and Braemar Hotels & Resorts, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin BSP Realty Trust	0	0	3	1	3.25
Braemar Hotels & Resorts	0	2	0	0	2.00

Franklin BSP Realty Trust presently has a consensus price target of $14.75, suggesting a potential upside of 14.25%. Braemar Hotels & Resorts has a consensus price target of $2.50, suggesting a potential downside of 3.47%. Given Franklin BSP Realty Trust’s stronger consensus rating and higher possible upside, research analysts clearly believe Franklin BSP Realty Trust is more favorable than Braemar Hotels & Resorts.

Dividends

Franklin BSP Realty Trust pays an annual dividend of $1.42 per share and has a dividend yield of 11.0%. Braemar Hotels & Resorts pays an annual dividend of $0.20 per share and has a dividend yield of 7.7%. Franklin BSP Realty Trust pays out 107.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Braemar Hotels & Resorts pays out -17.9% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Franklin BSP Realty Trust and Braemar Hotels & Resorts’ revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin BSP Realty Trust	$263.95 million	4.00	$145.21 million	$1.32	9.78
Braemar Hotels & Resorts	$739.34 million	0.23	-$27.02 million	($1.12)	-2.31

Franklin BSP Realty Trust has higher earnings, but lower revenue than Braemar Hotels & Resorts. Braemar Hotels & Resorts is trading at a lower price-to-earnings ratio than Franklin BSP Realty Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Franklin BSP Realty Trust and Braemar Hotels & Resorts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franklin BSP Realty Trust	53.82%	14.32%	3.20%
Braemar Hotels & Resorts	-3.65%	-8.43%	-1.20%

Volatility and Risk

Franklin BSP Realty Trust has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500. Comparatively, Braemar Hotels & Resorts has a beta of 1.96, suggesting that its stock price is 96% more volatile than the S&P 500.

Institutional and Insider Ownership

59.9% of Franklin BSP Realty Trust shares are held by institutional investors. Comparatively, 64.8% of Braemar Hotels & Resorts shares are held by institutional investors. 0.7% of Franklin BSP Realty Trust shares are held by insiders. Comparatively, 1.8% of Braemar Hotels & Resorts shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Franklin BSP Realty Trust beats Braemar Hotels & Resorts on 12 of the 17 factors compared between the two stocks.

About Franklin BSP Realty Trust

Benefit Street Partners operates as a self-managed real estate investment trust (REIT). BSP earns income from investing in a leveraged portfolio of residential mortgage pass-through securities consisting almost exclusively of adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the government-sponsored enterprises (GSEs)), or by an agency of the federal government, Government National Mortgage Association (Ginnie Mae). BSP’s investment strategy focuses on managing a portfolio of residential mortgage investments consisting almost exclusively of ARM Agency Securities. As of December 31, 2012, the Company’s securities consisted of Agency Securities classified as available-for-sale and Residential mortgage securities classified as held-to-maturity.

About Braemar Hotels & Resorts

Braemar Hotels & Resorts is a conservatively capitalized REIT that invests primarily in high RevPAR, full-service luxury hotels and resorts. We are listed on the New York Stock Exchange under the symbol BHR and are externally-advised by Ashford (NYSE American: AINC).