MTGE Investment (NASDAQ: MTGE) and Dynex Capital (NYSE:DX) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, earnings and institutional ownership.
Volatility and Risk
MTGE Investment has a beta of 0.26, meaning that its stock price is 74% less volatile than the S&P 500. Comparatively, Dynex Capital has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500.
71.0% of MTGE Investment shares are held by institutional investors. Comparatively, 53.3% of Dynex Capital shares are held by institutional investors. 1.1% of MTGE Investment shares are held by insiders. Comparatively, 7.1% of Dynex Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares MTGE Investment and Dynex Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings & Valuation
This table compares MTGE Investment and Dynex Capital’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|MTGE Investment||$91.12 million||8.87||$161.32 million||$3.42||5.16|
|Dynex Capital||$94.50 million||3.76||$33.89 million||$0.44||14.45|
MTGE Investment has higher earnings, but lower revenue than Dynex Capital. MTGE Investment is trading at a lower price-to-earnings ratio than Dynex Capital, indicating that it is currently the more affordable of the two stocks.
MTGE Investment pays an annual dividend of $2.00 per share and has a dividend yield of 11.3%. Dynex Capital pays an annual dividend of $0.72 per share and has a dividend yield of 11.3%. MTGE Investment pays out 58.5% of its earnings in the form of a dividend. Dynex Capital pays out 163.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MTGE Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of recent recommendations and price targets for MTGE Investment and Dynex Capital, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
MTGE Investment currently has a consensus target price of $20.50, suggesting a potential upside of 16.15%. Dynex Capital has a consensus target price of $7.25, suggesting a potential upside of 13.99%. Given MTGE Investment’s stronger consensus rating and higher probable upside, equities research analysts plainly believe MTGE Investment is more favorable than Dynex Capital.
MTGE Investment beats Dynex Capital on 11 of the 16 factors compared between the two stocks.
About MTGE Investment
MTGE Investment Corp., formerly American Capital Mortgage Investment Corp., is a real estate investment trust. The Company invests in, finances and manages a leveraged portfolio of real estate-related investments, which include agency residential mortgage-backed securities (RMBS), non-agency securities, other mortgage-related investments and other real estate investments. Agency RMBS includes residential mortgage pass-through certificates and collateralized mortgage obligations (CMOs) structured from residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a government-sponsored enterprise (GSE), or by a United States Government agency, such as Government National Mortgage Association (Ginnie Mae). Non-agency securities include securities backed by residential mortgages that are not guaranteed by a GSE or the United States Government agency, and credit risk transfer securities (CRT). The Company’s manager is MTGE Management, LLC.
About Dynex Capital
Dynex Capital, Inc. is an internally managed mortgage real estate investment trust, which invests in residential and commercial mortgage securities on a leveraged basis. The Company’s objective is to provide attractive risk-adjusted returns to its shareholders over the long term that is reflective of a leveraged fixed income portfolio with a focus on capital preservation. It seeks to provide returns to its shareholders through regular quarterly dividends and through capital appreciation. It invests in Agency and non-Agency mortgage-backed securities (MBS). MBS consists of residential MBS (RMBS), commercial MBS (CMBS) and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the United States Government or a government-sponsored entity (GSE), such as Fannie Mae and Freddie Mac.
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