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The RMR Group Inc. (RMR)
:RMR
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The RMR Group
(NASDAQ:RMR)
Rating:67Neutral
Price Target:
$16.00
▲( 9.44% Upside)
Positive Factors
Debt Management
Progress on addressing near-term debt maturities and reducing overall leverage should benefit the share price of RMR’s managed REITs over time.
Growth Strategy
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 Impact
Lower base management income across the managed REITs negatively influenced fiscal 1Q25 earnings and assets under management.
Leverage
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. SPDR S&P 500 ETF (SPY)
Market Cap
$484.53M
Dividend Yield11.84%
Average Volume (3M)157.34K
Price to Earnings (P/E)12.7
Beta (1Y)0.69
Revenue Growth-18.14%
EPS Growth-55.82%
CountryUS
Employees1,000
SectorReal Estate
Sector Strength56
IndustryReal Estate - Services
Share Statistics
EPS (TTM)0.21
Shares Outstanding15,877,246
10 Day Avg. Volume175,212
30 Day Avg. Volume157,339
Financial Highlights & Ratios
PEG Ratio-2.81
Price to Book (P/B)1.01
Price to Sales (P/S)0.00
P/FCF Ratio8.76
Enterprise Value/Market Cap0.87
Enterprise Value/Revenue0.12
Enterprise Value/Gross Profit2.09
Enterprise Value/Ebitda1.34
Forecast
1Y Price Target
$24.00Price Target Upside64.16% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
The RMR Group Business Overview & Revenue Model
Company DescriptionThe RMR Group (RMR) is a U.S.-based alternative asset management company that focuses primarily on real estate and real estate-related businesses. It manages a diverse portfolio of real estate assets spread across various sectors, including office, industrial, healthcare, and hospitality. RMR provides management services to a variety of publicly traded real estate investment trusts (REITs) and real estate operating companies, leveraging its extensive expertise in asset management to maximize property performance and shareholder value.
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 shows a mixed financial performance. Strong equity and leverage management with a low debt-to-equity ratio of 0.09 and a ROE of 14.8% indicate effective financial management. However, revenue and net income growth have been inconsistent, and free cash flow has declined by 50.3%, which could be a concern for future growth.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 | ||||
| 192.11M | 141.60M | 267.99M | 189.09M | 159.84M | 369.66M | Total Assets |
| 583.70M | 700.49M | 582.42M | 542.40M | 497.91M | 690.25M | Total Debt |
| 35.05M | 114.31M | 30.11M | 30.32M | 34.07M | 36.44M | Net Debt |
| -157.06M | -27.29M | -237.88M | -158.77M | -125.77M | -333.23M | Total Liabilities |
| 159.54M | 281.08M | 158.76M | 172.67M | 150.20M | 149.35M | Stockholders Equity |
| 241.50M | 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
14.62
Price Trends
15.29
Negative
16.75
Negative
19.57
Negative
Market Momentum
-0.06
Negative
44.88
Neutral
67.40
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 14.62 is below the 20-day moving average (MA) of 14.72, below the 50-day MA of 15.29, and below the 200-day MA of 19.57, indicating a bearish trend. The MACD of -0.06 indicates Negative momentum. The RSI at 44.88 is Neutral, neither overbought nor oversold. The STOCH value of 67.40 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 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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $484.53M | 12.67 | 8.36% | 11.84% | -18.14% | -55.82% | |
62 Neutral | $513.83M | 77.10 | 1.62% | ― | 1.02% | 11.92% | |
61 Neutral | $304.54M | 37.89 | 0.95% | ― | -5.86% | 59.60% | |
60 Neutral | $2.82B | 10.38 | 0.33% | 8508.19% | 5.98% | -17.49% | |
47 Neutral | $317.45M | ― | -47.84% | ― | 57.16% | -372.16% |
* Real Estate Sector Average
Performance Comparison
RMR
The RMR Group
14.62
-6.63
-31.20%
MLP
Maui Land & Pineapple Company
15.53
-5.58
-26.43%
FRPH
FRP Holdings
26.63
-2.38
-8.20%
TCI
Transcontinental Realty Investors
34.78
6.46
22.81%
The RMR Group Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q2-2025)
| % Change Since: 0.69%|
Next Earnings Date:Aug 08, 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 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.
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.