Annaly Capital Management (NYSE: NLY) and PennyMac Mortgage Investment Trust (NYSE:PMT) are both financials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, earnings, profitability and analyst recommendations.
Annaly Capital Management pays an annual dividend of $1.20 per share and has a dividend yield of 11.5%. PennyMac Mortgage Investment Trust pays an annual dividend of $1.88 per share and has a dividend yield of 10.7%. Annaly Capital Management pays out 90.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PennyMac Mortgage Investment Trust pays out 151.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Annaly Capital Management is clearly the better dividend stock, given its higher yield and lower payout ratio.
60.1% of Annaly Capital Management shares are owned by institutional investors. Comparatively, 65.3% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. 0.4% of Annaly Capital Management shares are owned by insiders. Comparatively, 2.1% of PennyMac Mortgage Investment Trust shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This is a summary of recent recommendations for Annaly Capital Management and PennyMac Mortgage Investment Trust, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Annaly Capital Management||0||3||1||0||2.25|
|PennyMac Mortgage Investment Trust||0||1||1||0||2.50|
Annaly Capital Management presently has a consensus price target of $11.63, indicating a potential upside of 10.93%. PennyMac Mortgage Investment Trust has a consensus price target of $18.50, indicating a potential upside of 4.93%. Given Annaly Capital Management’s higher possible upside, equities analysts clearly believe Annaly Capital Management is more favorable than PennyMac Mortgage Investment Trust.
This table compares Annaly Capital Management and PennyMac Mortgage Investment Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Annaly Capital Management||72.18%||11.66%||1.53%|
|PennyMac Mortgage Investment Trust||34.34%||7.03%||1.64%|
Valuation & Earnings
This table compares Annaly Capital Management and PennyMac Mortgage Investment Trust’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Annaly Capital Management||$1.48 billion||8.18||$1.57 billion||$1.33||7.88|
|PennyMac Mortgage Investment Trust||$317.94 million||3.36||$117.74 million||$1.24||14.22|
Annaly Capital Management has higher revenue and earnings than PennyMac Mortgage Investment Trust. Annaly Capital Management is trading at a lower price-to-earnings ratio than PennyMac Mortgage Investment Trust, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Annaly Capital Management has a beta of 0.1, indicating that its share price is 90% less volatile than the S&P 500. Comparatively, PennyMac Mortgage Investment Trust has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500.
Annaly Capital Management beats PennyMac Mortgage Investment Trust on 9 of the 15 factors compared between the two stocks.
Annaly Capital Management Company Profile
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.
PennyMac Mortgage Investment Trust Company Profile
PennyMac Mortgage Investment Trust is a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. The Company conducts all of its operations, and makes all of its investments, through PennyMac Operating Partnership, L.P. (its Operating Partnership) and its subsidiaries. It operates through two segments: correspondent production and investment activities. Its investment activities segment represents the Company’s investments in mortgage-related assets. The correspondent production segment represents the Company’s operations aimed at serving as an intermediary between mortgage lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality mortgage loans either directly or in the form of MBS, using the services of PNMAC Capital Management (the Manager or PCM) and PennyMac Loan Services, LLC (PLS), both indirect subsidiaries of PennyMac Financial Services, Inc. (PFSI or PennyMac).
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