Comparing Jernigan Capital (JCAP) & InfraREIT (HIFR)

Jernigan Capital (NYSE: JCAP) and InfraREIT (NYSE:HIFR) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, valuation, risk, earnings, analyst recommendations, dividends and institutional ownership.

Earnings and Valuation

This table compares Jernigan Capital and InfraREIT’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Jernigan Capital $7.80 million 36.53 $28.62 million $2.01 9.96
InfraREIT $184.70 million 5.38 $160.52 million $1.20 18.91

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

Volatility and Risk

Jernigan Capital has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, InfraREIT has a beta of 0.49, meaning that its share price is 51% less volatile than the S&P 500.

Dividends

Jernigan Capital pays an annual dividend of $1.40 per share and has a dividend yield of 7.0%. InfraREIT pays an annual dividend of $1.00 per share and has a dividend yield of 4.4%. Jernigan Capital pays out 69.7% of its earnings in the form of a dividend. InfraREIT pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Jernigan Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Jernigan Capital and InfraREIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Jernigan Capital 185.96% 9.37% 7.91%
InfraREIT 28.31% 6.28% 3.13%

Insider & Institutional Ownership

60.6% of Jernigan Capital shares are held by institutional investors. Comparatively, 83.8% of InfraREIT shares are held by institutional investors. 3.2% of Jernigan Capital shares are held by company insiders. Comparatively, 28.0% of InfraREIT shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Jernigan Capital and InfraREIT, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Jernigan Capital 0 1 2 0 2.67
InfraREIT 0 2 1 0 2.33

Jernigan Capital currently has a consensus target price of $25.33, indicating a potential upside of 26.60%. InfraREIT has a consensus target price of $22.00, indicating a potential downside of 3.04%. Given Jernigan Capital’s stronger consensus rating and higher possible upside, research analysts clearly believe Jernigan Capital is more favorable than InfraREIT.

Summary

Jernigan Capital beats InfraREIT on 11 of the 16 factors compared between the two stocks.

About Jernigan Capital

Jernigan Capital, Inc. is a commercial real estate finance company. The Company provides capital to private developers, owners and operators of self-storage facilities. It intends to generate long-term returns on development property investments through a fixed rate of interest on its invested capital together with an interest in the positive cash flows of the self-storage development from operations, sales and/or refinancings. It generates cash flows from construction loans and operating property loans in the form of a fixed interest rate and origination fees. It originates various loans, such as bridge loans and credit lines. It has development property investments in Orlando, Atlanta, Tampa, Chicago and Miami. Its operating property loans are located in New Orleans, Newark, Nashville, Sacramento and Chicago. The Company conducts its investment activities through Jernigan Capital Operating Company, LLC. The Company is externally managed and advised by JCap Advisors, LLC.

About InfraREIT

InfraREIT, Inc. is a real estate investment trust. The Company is engaged in owning and leasing rate-regulated transmission and distribution (T&D) assets in Texas. It leases its T&D assets to Sharyland Utilities, L.P. Its assets are located in the Texas Panhandle near Amarillo, the Permian Basin in and around Stanton, Central Texas around Brady, Northeast Texas in and around Celeste and South Texas near McAllen. As of December 31, 2016, its T&D assets consisted of approximately 54,000 electricity delivery points, approximately 815 circuit miles of transmission lines, approximately 40,500 circuit miles of distribution lines, 57 substations and a 300 megawatt high-voltage direct current (DC) Tie between Texas and Mexico (Railroad DC Tie). As of December 31, 2016, its T&D assets in each of its leases included S/B/C Lease, McAllen Lease, competitive renewable energy zone (CREZ) Lease, Stanton Transmission Loop Lease and Electric Reliability Council of Texas (ERCOT) Transmission Lease.

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