Comparing Forestar Group (NYSE:FOR) & American Realty Investors (NYSE:ARL)

Forestar Group (NYSE:FOR) and American Realty Investors (NYSE:ARL) are both small-cap real estate companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, risk, dividends, valuation, earnings, institutional ownership and profitability.

Institutional and Insider Ownership

35.5% of Forestar Group shares are owned by institutional investors. 0.5% of Forestar Group shares are owned by insiders. Comparatively, 90.8% of American Realty Investors shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Forestar Group and American Realty Investors”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Forestar Group	$1.72 billion	0.78	$167.90 million	$3.33	7.88
American Realty Investors	$51.05 million	5.03	$15.70 million	$0.52	30.56

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

Profitability

This table compares Forestar Group and American Realty Investors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Forestar Group	9.88%	9.42%	5.36%
American Realty Investors	16.36%	-0.37%	-0.28%

Analyst Ratings

This is a summary of recent ratings for Forestar Group and American Realty Investors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Forestar Group	0	4	2	0	2.33
American Realty Investors	1	0	0	0	1.00

Forestar Group currently has a consensus price target of $32.67, indicating a potential upside of 24.42%. Given Forestar Group’s stronger consensus rating and higher possible upside, analysts clearly believe Forestar Group is more favorable than American Realty Investors.

Risk & Volatility

Forestar Group has a beta of 1.4, meaning that its share price is 40% more volatile than the S&P 500. Comparatively, American Realty Investors has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.

Summary

Forestar Group beats American Realty Investors on 10 of the 14 factors compared between the two stocks.

About Forestar Group

Forestar Group Inc. operates as a residential lot development company in the United States. The company acquires land and develops infrastructure for single-family residential communities. It sells its residential single-family finished lots to local, regional, and national homebuilders. The company was incorporated in 2005 and is headquartered in Arlington, Texas. Forestar Group Inc. operates as a subsidiary of D.R. Horton, Inc.

About American Realty Investors

American Realty Investors, Inc., together with its subsidiaries, acquires, develops, owns, and manages multifamily and commercial real estate properties in the Southern United States. It operates through two segments, Residential and Commercial. The company leases apartment units to residents; and office, industrial, and retail space to various for-profit businesses, as well as local, state, and federal agencies. It also offers tenant services, including parking and storage space rental; and sells land and properties. The company was incorporated in 1999 and is based in Dallas, Texas. American Realty Investors, Inc. is a subsidiary of Realty Advisors, Inc.