Critical Analysis: Peakstone Realty Trust (NYSE:PKST) and Lument Finance Trust (NYSE:LFT)

Peakstone Realty Trust (NYSE:PKST) and Lument Finance Trust (NYSE:LFT) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, analyst recommendations, dividends, earnings and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Peakstone Realty Trust	-18.26%	-3.61%	-1.59%
Lument Finance Trust	18.19%	14.41%	1.98%

Dividends

Peakstone Realty Trust pays an annual dividend of $0.90 per share and has a dividend yield of 8.5%. Lument Finance Trust pays an annual dividend of $0.32 per share and has a dividend yield of 13.2%. Peakstone Realty Trust pays out -76.3% of its earnings in the form of a dividend. Lument Finance Trust pays out 88.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares Peakstone Realty Trust and Lument Finance Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Peakstone Realty Trust	$233.20 million	1.66	-$550.58 million	($1.18)	-8.99
Lument Finance Trust	$34.66 million	3.65	$19.72 million	$0.36	6.72

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

Risk and Volatility

Peakstone Realty Trust has a beta of 2.59, indicating that its share price is 159% more volatile than the S&P 500. Comparatively, Lument Finance Trust has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500.

Institutional and Insider Ownership

39.0% of Peakstone Realty Trust shares are held by institutional investors. Comparatively, 19.5% of Lument Finance Trust shares are held by institutional investors. 0.5% of Peakstone Realty Trust shares are held by company insiders. Comparatively, 2.7% of Lument Finance Trust shares are held 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.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Peakstone Realty Trust and Lument Finance Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Peakstone Realty Trust	0	1	0	0	2.00
Lument Finance Trust	0	1	1	0	2.50

Peakstone Realty Trust presently has a consensus target price of $15.00, suggesting a potential upside of 41.38%. Lument Finance Trust has a consensus target price of $2.50, suggesting a potential upside of 3.31%. Given Peakstone Realty Trust’s higher possible upside, analysts plainly believe Peakstone Realty Trust is more favorable than Lument Finance Trust.

Summary

Lument Finance Trust beats Peakstone Realty Trust on 11 of the 16 factors compared between the two stocks.

About Peakstone Realty Trust

Peakstone Realty Trust (NYSE: PKST) is an internally managed, real estate investment trust (REIT) that owns and operates a high-quality, newer-vintage portfolio of predominantly single-tenant industrial and office properties. These assets are generally leased to creditworthy tenants under long-term net lease agreements with contractual rent escalations. As of March 31, 2023, Peakstone's wholly-owned portfolio consists of 19 million square feet across 24 states in primarily high-growth, strategic coastal and sunbelt markets.

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.