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The RMR Group Inc. (RMR)
NASDAQ:RMR
Top Page
The RMR Group
(NASDAQ:RMR)
66Neutral
Positive Factors
Financial Performance
Distributable earnings came in ahead of expectations, attributed to higher income from recent balance sheet investments and lower taxes.
Growth and Expansion
The company is incubating new funds within each vertical and completed several financing transactions to accommodate future growth.
Liquidity
Recent financing transactions have solidified RMR’s liquidity, including a master repurchase agreement and credit facility.
Negative Factors
Earnings Performance
Fiscal 4Q adjusted EPS of $0.34 was below consensus estimates of $0.38.
Leverage and Headwinds
Continued downside from the managed REITs, which have been negatively influenced by excessive leverage and operating headwinds, causing fee income to decline.
Revenue Challenges
RMR Group continues to face headwinds across several of its managed REITs, which has weighed on revenues.
The RMR Group (RMR) vs. S&P 500 (SPY)
Market Cap
$531.81M
Dividend Yield10.81%
Average Volume (3M)184.47K
Price to Earnings (P/E)12.6
Beta (1Y)0.94
Revenue Growth-12.10%
EPS Growth-61.51%
CountryUS
Employees1,000
SectorReal Estate
Sector Strength70
IndustryReal Estate - Services
Share Statistics
EPS (TTM)1.32
Shares Outstanding15,844,688
10 Day Avg. Volume200,477
30 Day Avg. Volume184,475
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.47
Price to Cash Flow (P/CF)5.40
P/FCF Ratio5.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$24.00Price Target Upside45.99% Upside
Rating ConsensusHold
Number of Analyst Covering2
The RMR Group Business Overview & Revenue Model
Company DescriptionThe RMR Group Inc., through its subsidiary, The RMR Group LLC, provides business and property management services in the United States. The company provides management services to its four publicly traded real estate investment trusts and three real estate operating companies. It also provides investment advisory services. The company was formerly known as REIT Management & Research Inc. and changed its name to The RMR Group Inc. in September 2015. The RMR Group Inc. was founded in 1986 and is headquartered in Newton, Massachusetts.
How the Company Makes MoneyThe RMR Group generates revenue primarily through management fees it charges to the REITs and real estate operating companies it serves. These fees are typically based on a percentage of the managed assets' gross revenue or total asset value, aligning RMR's earnings with the performance of the properties. The company also earns incentive fees that are contingent upon the achievement of certain performance benchmarks, such as asset appreciation or operating income targets. Additionally, RMR may receive fees for property acquisition, disposition, and other real estate-related services. Its significant partnerships with various REITs and its strategic focus on diversified property sectors contribute to its stable revenue streams and growth potential.
The RMR Group Financial Statement Overview
Summary
The RMR Group has a mixed financial performance. Strong equity and leverage management are evident, with a low debt-to-equity ratio and a healthy ROE. However, declining revenue and net income growth, accompanied by a significant drop in free cash flow, highlight challenges in profitability and cash flow growth. The overall financial position is stable but requires improvements in growth metrics.Income Statement
The RMR Group's income statement shows moderate performance with some fluctuations. The TTM gross profit margin stands at 36.0%, indicating decent profitability. However, the net profit margin is relatively low at 4.1%, reflecting constraints on overall profitability. Revenue has declined in recent years, with a 10.6% decrease from 2023 to 2024. EBIT and EBITDA margins for 2024 TTM are 5.9% and 7.6%, respectively, showing operational efficiency but room for improvement.65
Positive
Balance Sheet
The balance sheet highlights a strong equity position. The debt-to-equity ratio is low at 0.09, suggesting limited leverage and financial risk. The return on equity (ROE) for 2024 TTM is 14.8%, demonstrating effective use of equity to generate earnings. The equity ratio is 34.2%, indicating a healthy proportion of equity financing relative to total assets.75
Positive
Cash Flow
The cash flow statement reveals a stable cash generation ability. The operating cash flow to net income ratio is 1.60, pointing to robust cash flow relative to net earnings. The free cash flow to net income ratio is 1.49, reflecting satisfactory conversion of earnings into free cash flow. The free cash flow witnessed a decline of 50.3% from 2023 to 2024, indicating potential challenges in cash flow growth.70
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 855.42M | 897.61M | 962.32M | 832.50M | 607.24M | 589.50M | Gross Profit |
| 201.63M | 288.46M | 169.56M | 133.86M | 117.56M | 107.55M | EBIT |
| 50.09M | 44.98M | 113.73M | 88.37M | 72.09M | 68.74M | EBITDA |
| 65.44M | 69.07M | 121.05M | 90.81M | 78.57M | 73.20M | Net Income Common Stockholders |
| 22.51M | 23.13M | 57.15M | 77.47M | 81.01M | 66.33M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 141.73M | 23.19M | 267.99M | 189.09M | 159.84M | 369.66M | Total Assets |
| 0.00 | 700.49M | 582.42M | 542.40M | 497.91M | 690.25M | Total Debt |
| 0.00 | 114.31M | 30.11M | 30.32M | 34.07M | 36.44M | Net Debt |
| 141.73M | -27.29M | -237.88M | -158.77M | -125.77M | -333.23M | Total Liabilities |
| 0.00 | 281.08M | 158.76M | 172.67M | 150.20M | 149.35M | Stockholders Equity |
| 230.24M | 237.57M | 240.07M | 206.62M | 195.12M | 295.92M |
| Cash Flow | Free Cash Flow | ||||
| 52.26M | 57.51M | 105.23M | 100.15M | 70.65M | 76.90M | Operating Cash Flow |
| 56.47M | 61.38M | 109.22M | 101.27M | 71.79M | 77.50M | Investing Cash Flow |
| -133.58M | -209.84M | 49.50M | -10.59M | -1.14M | -5.92M | Financing Cash Flow |
| 22.26M | 22.07M | -79.81M | -61.43M | -280.48M | -60.36M |
The RMR Group Technical Analysis
Negative
16.44
Price Trends
18.02
Negative
19.52
Negative
21.48
Negative
Market Momentum
-0.45
Positive
32.72
Neutral
29.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RMR, the sentiment is Negative. The current price of 16.44 is below the 20-day moving average (MA) of 17.33, below the 50-day MA of 18.02, and below the 200-day MA of 21.48, indicating a bearish trend. The MACD of -0.45 indicates Positive momentum. The RSI at 32.72 is Neutral, neither overbought nor oversold. The STOCH value of 29.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RMR.
The RMR Group Risk Analysis
The RMR Group disclosed 35 risk factors in its most recent earnings report. The RMR Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
The RMR Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $4.24B | 10.33 | 20.63% | 8.51% | ― | 58.52% | |
68 Neutral | $15.59B | 15.56 | 18.90% | 3.24% | 62.87% | ― | |
66 Neutral | $531.81M | 12.62 | 9.28% | 10.81% | -12.10% | -61.51% | |
66 Neutral | C$114.06B | 39.44 | 20.07% | 3.16% | 27.17% | 16.13% | |
64 Neutral | $102.69B | 35.29 | 13.23% | 0.60% | 42.19% | -18.20% | |
64 Neutral | $46.24B | 70.79 | 15.93% | 2.54% | 6.12% | -15.84% | |
61 Neutral | $4.72B | 17.64 | -3.07% | 10.89% | 5.99% | -21.86% |
* Real Estate Sector Average
Performance Comparison
RMR
The RMR Group
16.44
-5.13
-23.78%
AB
AllianceBernstein
38.47
6.92
21.93%
KKR
KKR & Co
117.84
20.50
21.06%
CG
Carlyle Group
44.27
-0.70
-1.56%
ARES
Ares Management
149.44
22.02
17.28%
TSE:BAM
Brookfield Asset Management Ltd. Class A
70.85
16.97
31.50%
The RMR Group Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: -13.75% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive and negative aspects. The company showcased strong liquidity, significant achievements in the residential sector, and impressive performance of its commercial mortgage REIT. However, it also faced challenges with decreased recurring revenues, difficulties in managed equity REITs, and a decline in EBITDA margins. Despite these challenges, the strategic focus on growth initiatives and debt management indicates a cautiously optimistic outlook.Highlights
Strong Liquidity Position
The RMR Group Inc. has nearly $150 million in cash and established a $100 million line of credit to enhance its financial profile and support growth initiatives.
Residential Sector Investment Success
Raised over $60 million from institutional partners to acquire two residential communities in South Florida with a purchase price of nearly $200 million, indicating strong investor interest and expected returns in the high teens.
Commercial Mortgage REIT Outperformance
Seven Hills Realty Trust delivered a total shareholder return of over 12%, significantly outperforming its industry benchmark with a return of negative 8%.
Strategic Debt Management
Executed $1.8 billion in financings, including a debt exchange transaction for OPI's 2025 debt maturity and successfully disposed of 17 properties for over $114 million to repay debt.
Lowlights
Decreased Recurring Service Revenues
Recurring service revenues decreased by approximately $700,000 sequentially due to enterprise value declines at managed equity REITs and lower property management fees from asset sales.
Challenges in Equity REITs
Managed equity REITs faced challenges leading to lower revenues, impacting The RMR Group Inc.'s overall performance and contributing to a forecasted decline in adjusted net income for the next quarter.
EBITDA Margin Decline
EBITDA margins declined from 52% to 42% over the last year, primarily due to the breakeven performance of the residential platform despite generating $5 million in fees.
Company Guidance
During The RMR Group Inc.'s fiscal first quarter 2025 earnings call, several key metrics and strategic initiatives were highlighted. The company reported an adjusted net income of $0.35 per share and distributable earnings of $0.46 per share, supported by an adjusted EBITDA of approximately $21 million. They have nearly $150 million in cash and a newly established $100 million line of credit, which enhances their financial profile. The RMR Group is focusing on three private capital growth areas for 2025: residential sector investments, credit strategies, and development initiatives. A recent example includes a residential investment in South Florida, where they raised over $60 million to acquire properties valued at nearly $200 million, with The RMR Group investing approximately $10 million. They anticipate high teen returns over the next three to five years. Furthermore, the company is working on fundraising efforts for both residential and private real estate credit vehicles, with plans to seed these with $100 million in bridge loans. Additionally, their commercial mortgage REIT, Seven Hills Realty Trust, delivered a total shareholder return of over 12% in 2024. Looking forward, The RMR Group expects adjusted net income between $0.29 and $0.30 per share for the next quarter, with distributable earnings projected between $0.42 and $0.43 per share.The RMR Group Corporate Events
Executive/Board ChangesShareholder Meetings
The RMR Group’s 2025 Annual Meeting Decisions
Positive
Mar 27, 2025
At the 2025 Annual Meeting, The RMR Group’s shareholders elected six directors to the board for terms extending to the 2026 meeting. Additionally, shareholders approved the Second Amended and Restated 2016 Omnibus Equity Plan and ratified Deloitte & Touche LLP as independent auditors for the 2025 fiscal year. The meeting also included a vote on executive compensation, which was passed. These decisions reflect shareholder support for the company’s strategic direction and governance.
Business Operations and StrategyFinancial Disclosures
The RMR Group Unveils Strategic Financial Outlook
Positive
Feb 18, 2025
On February 18, 2025, The RMR Group Inc. published an investor presentation on its website, detailing its strategic positioning and financial outlook. The company highlighted its diversified revenue sources, primarily from long-term contracts, and its robust infrastructure designed to enhance operational efficiencies and sustainability practices. The presentation also outlined potential risks such as reliance on a limited number of clients and uncertainties regarding interest rates. With over 35 years of experience, RMR remains well-positioned for growth, leveraging its substantial liquidity and scalable infrastructure to pursue new business strategies and capitalize on market opportunities.
Private Placements and FinancingBusiness Operations and Strategy
The RMR Group Secures $100M Credit Facility for Expansion
Positive
Jan 23, 2025
On January 22, 2025, The RMR Group entered into a new $100 million senior secured revolving credit facility with Citibank, N.A. as Administrative and Collateral Agent. This facility, with an initial maturity date of January 22, 2028, aims to enhance RMR’s financial flexibility for investing in private capital initiatives. It supports RMR’s strategic expansion, including a residential platform acquisition valued over $5 billion and a private capital debt vehicle with $67 million in commitments. The credit facility, secured by RMR’s assets, is intended for general corporate purposes and bears a variable interest rate based on SOFR plus a margin.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.