Capital Trust (NYSE: BXMT) and Redwood Trust (NYSE:RWT) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.
This table compares Capital Trust and Redwood Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Capital Trust pays an annual dividend of $2.48 per share and has a dividend yield of 8.0%. Redwood Trust pays an annual dividend of $1.12 per share and has a dividend yield of 7.1%. 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. Redwood Trust pays out 64.0% of its earnings in the form of a dividend. Redwood Trust has increased its dividend for 3 consecutive years.
Earnings and Valuation
This table compares Capital Trust and Redwood Trust’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Capital Trust||$298.97 million||9.88||$220.95 million||$2.33||13.37|
|Redwood Trust||$215.70 million||5.67||$134.95 million||$1.75||9.06|
Capital Trust has higher revenue and earnings than Redwood Trust. Redwood Trust is trading at a lower price-to-earnings ratio than Capital Trust, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Capital Trust has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500. Comparatively, Redwood Trust has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500.
Institutional and Insider Ownership
61.9% of Capital Trust shares are owned by institutional investors. Comparatively, 85.8% of Redwood Trust shares are owned by institutional investors. 0.9% of Capital Trust shares are owned by insiders. Comparatively, 2.3% of Redwood Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This is a summary of current recommendations and price targets for Capital Trust and Redwood Trust, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Capital Trust currently has a consensus price target of $33.50, suggesting a potential upside of 7.51%. Given Capital Trust’s higher possible upside, equities analysts clearly believe Capital Trust is more favorable than Redwood Trust.
Capital Trust beats Redwood Trust on 9 of the 16 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 Redwood Trust
Redwood Trust, Inc., through its subsidiaries, focuses on investing in mortgage and other real estate related assets. The Company is engaged in mortgage banking activities. The Company operates through three segments: Residential Investments, Residential Mortgage Banking and Commercial. The Residential Investments segment includes a portfolio of investments in residential mortgage-backed securities (RMBS) retained from its Sequoia securitizations. The Residential Mortgage Banking segment consists of operating a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to its investment portfolio. Its Commercial segment consists of investments in multi-family securities and commercial mortgage-backed securities, as well as a remaining commercial loan investment following the sale of the remainder of its commercial mezzanine loan portfolio.
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