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The RMR Group Inc. (RMR)
NASDAQ:RMR
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The RMR Group
(NASDAQ:RMR)
Rating:70Outperform
Price Target:
$19.50
▲(15.32%Upside)
Positive Factors
Debt Management
Recent debt transactions offer some dry powder to expand the private capital platform.
Liquidity
Recent financing transactions have solidified RMR’s liquidity, including a master repurchase agreement and credit facility.
Negative Factors
REIT Performance
Continued downside from the managed REITs, which have been negatively influenced by excessive leverage and operating headwinds, causing fee income to decline.
Revenue Challenges
High leverage and operating headwinds across its managed REIT business will likely curb revenues.
The RMR Group (RMR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$539.36M
Dividend Yield10.64%
Average Volume (3M)120.24K
Price to Earnings (P/E)14.1
Beta (1Y)0.74
Revenue Growth-18.14%
EPS Growth-55.82%
CountryUS
Employees1,000
SectorReal Estate
Sector Strength61
IndustryReal Estate - Services
Share Statistics
EPS (TTM)0.21
Shares Outstanding15,877,246
10 Day Avg. Volume137,944
30 Day Avg. Volume120,239
Financial Highlights & Ratios
PEG Ratio-1.36
Price to Book (P/B)1.23
Price to Sales (P/S)0.00
P/FCF Ratio9.19
Enterprise Value/Market Cap0.97
Enterprise Value/Revenue0.15
Enterprise Value/Gross Profit2.15
Enterprise Value/Ebitda2.02
Forecast
1Y Price Target
$24.00Price Target Upside41.93% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering0
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 services fees from the real estate assets it oversees. These fees are typically based on a percentage of the gross rents collected from the properties under management, as well as fixed fees for specific services provided. Additionally, RMR earns incentive fees based on the performance of the assets relative to benchmarks or specified goals. The company also benefits from strategic partnerships and joint ventures that enhance its ability to acquire, manage, and dispose of real estate assets efficiently, contributing to its revenue streams.
The RMR Group Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q2-2025)
| % Change Since: 19.59%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call revealed both positive and negative aspects. On the positive side, RMR reported strong growth in private capital AUM, successful joint venture acquisitions, and solid performances from DHC and SVC. However, the company faced challenges with slightly below-expectation results, economic volatility affecting fundraising, and ongoing headwinds for OPI. The decline in recurring service revenues also posed a concern.Q2-2025 Updates
Positive Updates
Joint Venture Acquisitions in South Florida
Closed two joint venture acquisitions of residential communities in South Florida with an aggregate transaction value of approximately $196 million. RMR raised $64.3 million in equity from institutional investors and retained a 15% interest.
Value-Add Community Shopping Center Acquisition
Closed on a $21 million value-add community shopping center outside of Chicago, currently 77% occupied. Target returns are in the mid-to-high-teens over a five-year hold period.
Growth in Private Capital Assets Under Management
Private capital AUM has grown from $0 to over $12 billion in less than five years and is expected to comprise over half of RMR's total AUM in the next five years.
Strong Performance from DHC's SHOP Segment
DHC posted strong first-quarter results, with normalized FFO per share and adjusted EBITDA exceeding expectations. SHOP segment's NOI improved by 49% year-over-year.
Stability and Progress at SVC
SVC's first-quarter results exceeded expectations with RevPAR improving 2.6% year-over-year. The deleveraging plan to sell 123 non-core hotels for $1.1 billion is on track.
Negative Updates
Slightly Below Expectation Results
Adjusted net income came in at $0.28 per share and distributable earnings of $0.40 per share, slightly below expectations due to lower capital expenditures by managed REITs and deleveraging activities.
Challenges in Fundraising and Market Volatility
Economic volatility has tempered enthusiasm among private capital investors, causing some to pause new allocations despite opportunities in the market.
Decline in Recurring Service Revenues
Recurring service revenues were $45.5 million, a sequential decrease of $1.8 million, primarily due to lower capital spend and declines in managed equity REITs' enterprise values.
Headwinds for OPI
OPI continues to face challenges associated with its nationwide portfolio of office properties and is exploring options to address upcoming debt obligations.
Company Guidance
During The RMR Group's Fiscal Second Quarter 2025 earnings call, the company provided guidance on several key financial metrics. Adjusted net income was reported at $0.28 per share, while distributable earnings were $0.40 per share, both slightly below expectations due to reduced capital expenditures by managed equity REITs amidst economic uncertainty. Recurring service revenues were $45.5 million, with expectations for the next quarter ranging between $44 million and $45 million. The company closed two joint venture acquisitions in South Florida totaling $196 million and invested in a $21 million value-add community shopping center near Chicago, targeting a mid-to-high-teens return over five years. RMR expects adjusted earnings per share for the next quarter to be between $0.28 and $0.30, with adjusted EBITDA between $19 million and $20 million, and distributable earnings between $0.42 and $0.44 per share. The dividend payout ratio stands at approximately 79%, supported by $137 million in cash and no corporate debt.The RMR Group Financial Statement Overview
Summary
The RMR Group shows a stable financial position with a strong balance sheet and decent cash flow generation. However, revenue decline and low profit margins raise concerns. Operational efficiency needs improvement to enhance profitability.Income Statement
The RMR Group's income statement shows mixed results. The gross profit margin for TTM (Trailing-Twelve-Months) is approximately 30.25%, and the net profit margin stands at 2.52%, indicating a narrow profitability. Revenue has declined from the previous year, showing a contraction of about 10.39%, which is concerning. The EBIT and EBITDA margins for TTM are 5.38% and 7.52% respectively, which are relatively low, suggesting limited operational efficiency.65
Positive
Balance Sheet
The balance sheet reflects a strong equity position with an equity ratio of 36.06% in TTM, supporting financial stability. The debt-to-equity ratio is relatively low at 0.48, indicating prudent leverage management. ROE is modest at 8.65% for TTM, suggesting average returns on equity.78
Positive
Cash Flow
The cash flow analysis reveals a stable operating cash flow to net income ratio of 3.18 for TTM, indicating good cash generation relative to net income. Free cash flow has shown consistent growth with a strong free cash flow to net income ratio of 2.97 for TTM. However, the overall investing cash flow is negative, which could suggest high capital expenditures or investments.70
Positive
| Breakdown | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 897.61M | 962.32M | 832.50M | 607.24M | 589.50M |
| Gross Profit | 288.46M | 169.56M | 133.86M | 117.56M | 107.55M |
| EBITDA | 69.07M | 121.05M | 90.81M | 78.57M | 73.20M |
| Net Income | 23.13M | 57.15M | 77.47M | 81.01M | 66.33M |
Balance Sheet | |||||
| Total Assets | 700.49M | 582.42M | 542.40M | 497.91M | 690.25M |
| Cash, Cash Equivalents and Short-Term Investments | 141.60M | 267.99M | 189.09M | 159.84M | 369.66M |
| Total Debt | 114.31M | 30.11M | 30.32M | 34.07M | 36.44M |
| Total Liabilities | 281.08M | 158.76M | 172.67M | 150.20M | 149.35M |
| Stockholders Equity | 237.57M | 240.07M | 206.62M | 195.12M | 295.92M |
Cash Flow | |||||
| Free Cash Flow | 57.51M | 105.23M | 100.15M | 70.65M | 76.90M |
| Operating Cash Flow | 61.38M | 109.22M | 101.27M | 71.79M | 77.50M |
| Investing Cash Flow | -209.84M | 49.50M | -10.59M | -1.14M | -5.92M |
| Financing Cash Flow | 22.07M | -79.81M | -61.43M | -280.48M | -60.36M |
The RMR Group Technical Analysis
Positive
16.91
Price Trends
15.73
Positive
15.53
Positive
17.70
Negative
Market Momentum
0.34
Positive
57.90
Neutral
18.12
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RMR, the sentiment is Positive. The current price of 16.91 is above the 20-day moving average (MA) of 16.75, above the 50-day MA of 15.73, and below the 200-day MA of 17.70, indicating a neutral trend. The MACD of 0.34 indicates Positive momentum. The RSI at 57.90 is Neutral, neither overbought nor oversold. The STOCH value of 18.12 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RMR.
The RMR Group Risk Analysis
The RMR Group disclosed 2 risk factors in its most recent earnings report. The RMR Group reported the most risks in the "Legal & Regulatory" 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 (66)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $539.36M | 14.10 | 8.36% | 10.64% | -18.14% | -55.82% | |
66 Neutral | £957.08M | 13.96 | 2.04% | 185.02% | 11.04% | 38.13% | |
| ― | $77.61M | ― | -0.14% | ― | ― | ― | |
51 Neutral | $356.73M | ― | -47.84% | ― | 57.16% | -372.16% | |
| ― | $256.23M | 16.04 | 7.10% | ― | ― | ||
69 Neutral | $524.71M | 76.85 | 1.62% | ― | 1.02% | 11.92% | |
55 Neutral | $358.96M | 45.26 | 0.95% | ― | -5.86% | 59.60% |
* Real Estate Sector Average
Performance Comparison
RMR
The RMR Group
16.91
-6.18
-26.76%
MAYS
JW Mays
38.50
-6.00
-13.48%
MLP
Maui Land & Pineapple Company
17.60
-6.31
-26.39%
NEN
New England Realty Associates Partnershi
73.75
8.27
12.63%
FRPH
FRP Holdings
27.25
-2.91
-9.65%
TCI
Transcontinental Realty Investors
41.20
10.65
34.86%
The RMR Group Corporate Events
Business Operations and StrategyFinancial Disclosures
The RMR Group Highlights Growth and Sustainability
Positive
Jun 2, 2025
On June 2, 2025, The RMR Group Inc. released an investor presentation highlighting its diversified revenue sources and durable earnings, with nearly 70% of service revenues derived from long-term contracts. The company is well-positioned for growth with a scalable infrastructure and significant liquidity, presenting a compelling investment opportunity due to its valuation discount to industry peers. The presentation also emphasized RMR’s commitment to sustainability and its competitive advantage as a vertically integrated real estate operating platform.
The most recent analyst rating on (RMR) stock is a Hold with a $25.00 price target. To see the full list of analyst forecasts on The RMR Group stock, see the RMR Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.