Critical Analysis: Transcontinental Realty Investors (NYSE:TCI) vs. CoStar Group (NASDAQ:CSGP)

CoStar Group (NASDAQ:CSGP) and Transcontinental Realty Investors (NYSE:TCI) are both real estate companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.

Earnings & Valuation

This table compares CoStar Group and Transcontinental Realty Investors”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CoStar Group	$3.25 billion	3.74	$7.00 million	$0.19	157.89
Transcontinental Realty Investors	$49.06 million	8.71	$13.80 million	$0.94	51.82

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

Insider and Institutional Ownership

96.6% of CoStar Group shares are held by institutional investors. 1.2% of CoStar Group shares are held by insiders. Comparatively, 86.2% of Transcontinental Realty Investors shares are held 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
CoStar Group	2.08%	3.74%	2.96%
Transcontinental Realty Investors	16.08%	-0.17%	-0.13%

Analyst Recommendations

This is a summary of current ratings for CoStar Group and Transcontinental Realty Investors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CoStar Group	2	9	9	0	2.35
Transcontinental Realty Investors	1	0	0	0	1.00

CoStar Group currently has a consensus target price of $40.11, indicating a potential upside of 33.68%. Given CoStar Group’s stronger consensus rating and higher probable upside, equities research analysts clearly believe CoStar Group is more favorable than Transcontinental Realty Investors.

Risk and Volatility

CoStar Group has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500. Comparatively, Transcontinental Realty Investors has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500.

Summary

CoStar Group beats Transcontinental Realty Investors on 8 of the 14 factors compared between the two stocks.

About CoStar Group

CoStar Group, Inc. provides information, analytics, and online marketplace services to the commercial real estate, hospitality, residential, and related professionals industries in the United States, Canada, Europe, the Asia Pacific, and Latin America. The company offers CoStar Property that provides inventory of office, industrial, retail, multifamily, hospitality, and student housing properties and land; CoStar Sales, a robust database of comparable commercial real estate sales transactions; CoStar Market Analytics to view and report on aggregated market and submarket trends; and CoStar Tenant, an online business-to-business prospecting and analytical tool that provides tenant information. It also provides Leasing, a tool to capture, manage, and maintain lease data; CoStar Lease Analysis; Public Record, a searchable database of commercially zoned parcels; CoStar Real Estate Manager, a real estate lease administration, portfolio management, and lease accounting compliance software solution; and CoStar Risk Analytics and CoStar Investment. In addition, it offers apartment marketing sites, such as ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, WestsideRentals.com, AFTER55.com, CorporateHousing.com, ForRentUniversity.com, Apartamentos.com, and Off Campus Partners; LoopNet Premium Lister; LoopNet Diamond, Platinum, and Gold Ads; LandsofAmerica.com, LandAndFarm.com, and LandWatch.com for rural land for-sale; BizBuySell.com, BizQuest.com, and FindaFranchise.com for operating businesses and franchises for-sale; Ten-X, an online auction platform for commercial real estate; and HomeSnap, an online and mobile software platform, as well as Homes.com, a homes for sale listings site. The company was founded in 1987 and is headquartered in Washington, the District of Columbia.

About Transcontinental Realty Investors

Transcontinental Realty Investors, Inc., a Dallas-based real estate investment company, holds a diverse portfolio of equity real estate located across the U.S., including office buildings, apartments, shopping centers, and developed and undeveloped land. The Company invests in real estate through direct ownership, leases and partnerships and invests in mortgage loans on real estate. The Company also holds mortgage receivables.