NasdaqCM:RMR

Stock Analysis Report

Executive Summary

The RMR Group Inc., through its subsidiary, The RMR Group LLC, provides business and property management services in the United States.

Rewards

Trading at 46.6% below its fair value

Revenue is forecast to grow 23.28% per year

Risk Analysis

Earnings are forecast to decline by an average of -37.3% per year for the next 3 years

Unstable dividend track record



Snowflake Analysis

Flawless balance sheet and good value.

Share Price & News

How has RMR Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: RMR has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.0%

RMR

2.9%

US Real Estate

2.0%

US Market


1 Year Return

-32.7%

RMR

16.0%

US Real Estate

23.5%

US Market

Return vs Industry: RMR underperformed the US Real Estate industry which returned 17.2% over the past year.

Return vs Market: RMR underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

RMRIndustryMarket
7 Day3.0%2.9%2.0%
30 Day-0.4%1.2%4.3%
90 Day-0.9%13.0%12.2%
1 Year-30.9%-32.7%17.0%16.0%26.1%23.5%
3 Year11.3%5.2%41.2%37.7%53.1%43.2%
5 Yearn/a20.7%16.6%75.5%56.1%

Price Volatility Vs. Market

How volatile is RMR Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is RMR Group undervalued compared to its fair value and its price relative to the market?

45.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RMR ($43.97) is trading below our estimate of fair value ($82.33)

Significantly Below Fair Value: RMR is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: RMR is good value based on its PE Ratio (9.6x) compared to the Real Estate industry average (25.3x).

PE vs Market: RMR is good value based on its PE Ratio (9.6x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: RMR's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: RMR is overvalued based on its PB Ratio (2.5x) compared to the US Real Estate industry average (1.5x).


Next Steps

Future Growth

How is RMR Group forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

-37.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RMR's earnings are forecast to decline over the next 3 years (-37.3% per year).

Earnings vs Market: RMR's earnings are forecast to decline over the next 3 years (-37.3% per year).

High Growth Earnings: RMR's earnings are forecast to decline over the next 3 years.

Revenue vs Market: RMR's revenue (23.3% per year) is forecast to grow faster than the US market (7.5% per year).

High Growth Revenue: RMR's revenue (23.3% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: RMR's Return on Equity is forecast to be low in 3 years time (8.4%).


Next Steps

Past Performance

How has RMR Group performed over the past 5 years?

47.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RMR has high quality earnings.

Growing Profit Margin: RMR's current net profit margins (24.6%) are lower than last year (27.1%).


Past Earnings Growth Analysis

Earnings Trend: RMR's earnings have grown significantly by 47.4% per year over the past 5 years.

Accelerating Growth: RMR's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: RMR had negative earnings growth (-22.4%) over the past year, making it difficult to compare to the Real Estate industry average (-25%).


Return on Equity

High ROE: RMR's Return on Equity (32%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is RMR Group's financial position?


Financial Position Analysis

Short Term Liabilities: RMR's short term assets ($464.9M) exceed its short term liabilities ($98.0M).

Long Term Liabilities: RMR's short term assets ($464.9M) exceed its long term liabilities ($40.8M).


Debt to Equity History and Analysis

Debt Level: RMR is debt free.

Reducing Debt: RMR has not had any debt for past 5 years.

Debt Coverage: RMR has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: RMR has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: RMR has a low level of unsold assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if RMR's debt is covered by short term assets.


Next Steps

Dividend

What is RMR Group's current dividend yield, its reliability and sustainability?

3.37%

Current Dividend Yield


Dividend Yield vs Market

company3.4%marketbottom25%1.4%markettop25%3.7%industryaverage2.2%forecastin3Years3.1%

Current dividend yield vs market & industry

Notable Dividend: RMR's dividend (3.46%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: RMR's dividend (3.46%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, RMR has been paying a dividend for less than 10 years.

Growing Dividend: RMR's dividend payments have increased, but the company has only paid a dividend for 4 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (31.1%), RMR's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: RMR's dividends in 3 years are forecast to be well covered by earnings (32.3% payout ratio).


Next Steps

  • Explore strong dividend paying companies in the Real Estate industry.

Management

What is the CEO of RMR Group's salary, the management and board of directors tenure and is there insider trading?

5.0yrs

Average management tenure


CEO

Adam Portnoy (49yo)

5yrs

Tenure

US$3,984,250

Compensation

Mr. Adam David Portnoy has been Managing Director and Director at Five Star Senior Living Inc., since March 20, 2018 and serves as a Chair of the Board since June 11, 2019. Mr. Portnoy serves as the Honora ...


CEO Compensation Analysis

Compensation vs Market: Adam's total compensation ($USD3.98M) is about average for companies of similar size in the US market ($USD3.86M).

Compensation vs Earnings: Adam's compensation has been consistent with company performance over the past year.


Management Age and Tenure

5.0yrs

Average Tenure

56yo

Average Age

Experienced Management: RMR's management team is seasoned and experienced (5 years average tenure).


Board Age and Tenure

4.2yrs

Average Tenure

57yo

Average Age

Experienced Board: RMR's board of directors are considered experienced (4.2 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$105,496,32001 Jul 19
Diversified Healthcare Trust
EntityCompany
Shares2,637,408
Max PriceUS$40.00
SellUS$100,151,08001 Jul 19
Service Properties Trust
EntityCompany
Shares2,503,777
Max PriceUS$40.00
SellUS$112,042,40001 Jul 19
Office Properties Income Trust
EntityCompany
Shares2,801,060
Max PriceUS$40.00

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Jennifer Clark (57yo)

    MD, Executive VP

    • Tenure: 5yrs
    • Compensation: US$4.58m
  • John Murray (58yo)

    Executive Vice President of RMR Group LLC

    • Tenure: 19yrs
    • Compensation: US$3.92m
  • Adam Portnoy (49yo)

    CEO, President

    • Tenure: 5yrs
    • Compensation: US$3.98m
  • Mark Young (56yo)

    Senior Vice President of RMR Group LLC

    • Steve Miano

      Vice President of Accounting- RMR Group LLC

      • Carlos Flores

        Senior Vice President of RMR Group LLC

        • Matthew Jordan (44yo)

          Executive VP

          • Tenure: 5yrs
          • Compensation: US$2.78m
        • Jennifer Francis

          Senior Vice President of RMR Group LLC

          • Eileen Kiley

            Senior VP & Chief Human Resources Officer of RMR Group LLC

            • Gregory Carey

              Senior VP & Chief Information Officer

              • Tenure: 1yrs

            Board Members

            • Jennifer Clark (57yo)

              MD, Executive VP

              • Tenure: 5yrs
              • Compensation: US$4.58m
            • Walter Watkins (72yo)

              Independent Director

              • Tenure: 4.2yrs
              • Compensation: US$266.50k
            • Adam Portnoy (49yo)

              CEO, President

              • Tenure: 5yrs
              • Compensation: US$3.98m
            • Ann Logan (64yo)

              Independent Director

              • Tenure: 4.2yrs
              • Compensation: US$281.50k
            • Rosen Plevneliev (54yo)

              Independent Director

              • Tenure: 2.8yrs
              • Compensation: US$265.25k

            Company Information

            The RMR Group Inc.'s company bio, employee growth, exchange listings and data sources


            Key Information

            • Name: The RMR Group Inc.
            • Ticker: RMR
            • Exchange: NasdaqCM
            • Founded: 1986
            • Industry: Diversified Real Estate Activities
            • Sector: Real Estate
            • Implied Market Cap: US$1.408b
            • Market Cap: US$735.796m
            • Shares outstanding: 31.30m
            • Website: https://www.rmrgroup.com

            Number of Employees


            Location

            • The RMR Group Inc.
            • Two Newton Place
            • Suite 300
            • Newton
            • Massachusetts
            • 2458
            • United States

            Listings

            TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
            RMRNasdaqCM (Nasdaq Capital Market)YesClass A Common SharesUSUSDNov 2015
            26RDB (Deutsche Boerse AG)YesClass A Common SharesDEEURNov 2015

            Biography

            The RMR Group Inc., through its subsidiary, The RMR Group LLC, provides business and property management services in the United States. It provides management services to its four publicly traded real estate investment trusts (REITs) and three real estate operating companies. As of September 30, 2019, the company had approximately 2,200 properties in 48 states under management, which are primarily owned by its Managed Equity REITs. 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. 


            Company Analysis and Financial Data Status

            All financial data provided by Standard & Poor's Capital IQ.
            DataLast Updated (UTC time)
            Company Analysis2020/01/18 00:27
            End of Day Share Price2020/01/17 00:00
            Earnings2019/09/30
            Annual Earnings2019/09/30


            Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.