Head to Head Review: Capital Trust (BXMT) and Annaly Capital Management (NLY)

Capital Trust (NYSE: BXMT) and Annaly Capital Management (NYSE:NLY) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.

Profitability

This table compares Capital Trust and Annaly Capital Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capital Trust 55.05% 8.76% 2.43%
Annaly Capital Management 121.84% 11.33% 1.52%

Earnings & Valuation

This table compares Capital Trust and Annaly Capital Management’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Capital Trust $298.97 million 9.95 $220.95 million $2.33 13.46
Annaly Capital Management $3.30 billion 4.01 $3.14 billion $2.89 4.21

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

Insider & Institutional Ownership

61.3% of Capital Trust shares are held by institutional investors. Comparatively, 51.3% of Annaly Capital Management shares are held by institutional investors. 0.9% of Capital Trust shares are held by company insiders. Comparatively, 0.4% of Annaly Capital Management 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 Recommendations

This is a breakdown of current ratings and target prices for Capital Trust and Annaly Capital Management, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capital Trust 0 3 3 0 2.50
Annaly Capital Management 1 3 2 0 2.17

Capital Trust presently has a consensus target price of $33.50, indicating a potential upside of 6.79%. Annaly Capital Management has a consensus target price of $11.25, indicating a potential downside of 7.56%. Given Capital Trust’s stronger consensus rating and higher possible upside, research analysts clearly believe Capital Trust is more favorable than Annaly Capital Management.

Volatility & Risk

Capital Trust has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, Annaly Capital Management has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500.

Dividends

Capital Trust pays an annual dividend of $2.48 per share and has a dividend yield of 7.9%. Annaly Capital Management pays an annual dividend of $1.20 per share and has a dividend yield of 9.9%. Capital Trust pays out 106.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Annaly Capital Management pays out 41.5% of its earnings in the form of a dividend. Annaly Capital Management has increased its dividend for 3 consecutive years. Annaly Capital Management is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Capital Trust beats Annaly Capital Management on 9 of the 17 factors compared between the two stocks.

About Capital Trust

Blackstone Mortgage Trust, Inc. is a holding company. The Company conducts its operations as a real estate investment trust for the United States federal income tax purposes. The Company originates and purchases senior loans collateralized by properties in North America and Europe. The Company’s business is focused on originating or acquiring senior, floating rate mortgage loans that are secured by a first priority mortgage on commercial real estate assets primarily in the office, lodging, retail, residential and industrial sectors. These investments may be in the form of whole loans or may also include pari passu participations within mortgage loans. It directly originates, co-originates and acquires debt instruments in conjunction with acquisitions, refinancings and recapitalizations of commercial real estate. The Company’s manager is BXMT Advisors L.L.C.

About Annaly Capital Management

Annaly Capital Management, Inc. is a mortgage real estate investment trust (REIT). The Company owns a portfolio of real estate related investments. Its investment groups primarily consist of Agency, which invests primarily in various types of Agency mortgage-backed securities and related derivatives to hedge these investments; Residential credit, which invests primarily in non-Agency mortgage-backed assets within securitized products and residential mortgage loan markets; Commercial real estate, which originates and invests in commercial mortgage loans, securities, and other commercial real estate investments, and Middle market, which provides customized debt financing to middle-market businesses. Its business operations consist of Annaly Commercial Real Estate Group, Inc., which is its subsidiary that specializes in originating or acquiring, financing and managing commercial loans and other commercial real estate debt; Annaly Middle Market Lending LLC, and RCap Securities, Inc.

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