Analyzing Grow Capital (OTCMKTS:GRWC) and Forestar Group (NYSE:FOR)

Grow Capital (OTCMKTS:GRWC) and Forestar Group (NYSE:FOR) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, risk, profitability, dividends, valuation and earnings.

Volatility and Risk

Grow Capital has a beta of 29.37, meaning that its share price is 2,837% more volatile than the S&P 500. Comparatively, Forestar Group has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for Grow Capital and Forestar Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Grow Capital	0	0	0	0	0.00
Forestar Group	0	3	4	0	2.57

Forestar Group has a consensus target price of $32.00, suggesting a potential upside of 20.32%. Given Forestar Group’s stronger consensus rating and higher possible upside, analysts plainly believe Forestar Group is more favorable than Grow Capital.

Valuation & Earnings

This table compares Grow Capital and Forestar Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Grow Capital	$3.01 million	17.63	-$3.62 million	($0.03)	-11.60
Forestar Group	$1.66 billion	0.81	$167.90 million	$3.29	8.08

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

Profitability

This table compares Grow Capital and Forestar Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Grow Capital	-117.42%	N/A	N/A
Forestar Group	10.11%	10.08%	5.52%

Insider & Institutional Ownership

35.5% of Forestar Group shares are held by institutional investors. 43.9% of Grow Capital shares are held by company insiders. Comparatively, 0.4% of Forestar Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Forestar Group beats Grow Capital on 11 of the 14 factors compared between the two stocks.

About Grow Capital

Grow Capital, Inc. operates in the financial technology sector. It provides software, technology, and services to financial services firms and advisors. The company's software suite delivers customized back office compliance, multi-pay commission processing, and new client application submission system, as well as digital engagement marketing services centric to financial services. It also provides software customization, licensing, and subscription service contracts, as well as ongoing customization and maintenance services; and ad hoc services, including web hosting, website development, and other complementary professional services. The company was incorporated in 1999 and is based in Henderson, Nevada.

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.