Analyzing Bluerock Residential Growth REIT (BRG) and Two Harbors Investments Corp (TWO)

Bluerock Residential Growth REIT (NYSE: BRG) and Two Harbors Investments Corp (NYSE:TWO) are both residential reits companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, valuation, institutional ownership, profitability, earnings and dividends.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Bluerock Residential Growth REIT and Two Harbors Investments Corp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bluerock Residential Growth REIT 0 1 3 0 2.75
Two Harbors Investments Corp 0 2 4 0 2.67

Bluerock Residential Growth REIT currently has a consensus target price of $13.56, indicating a potential upside of 16.42%. Two Harbors Investments Corp has a consensus target price of $17.92, indicating a potential upside of 16.72%. Given Two Harbors Investments Corp’s higher probable upside, analysts plainly believe Two Harbors Investments Corp is more favorable than Bluerock Residential Growth REIT.

Risk & Volatility

Bluerock Residential Growth REIT has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Two Harbors Investments Corp has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Earnings and Valuation

This table compares Bluerock Residential Growth REIT and Two Harbors Investments Corp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Bluerock Residential Growth REIT N/A N/A N/A ($0.32) -36.41
Two Harbors Investments Corp $633.49 million 4.23 $353.27 million $2.92 5.26

Two Harbors Investments Corp has higher revenue and earnings than Bluerock Residential Growth REIT. Bluerock Residential Growth REIT is trading at a lower price-to-earnings ratio than Two Harbors Investments Corp, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

70.5% of Two Harbors Investments Corp shares are held by institutional investors. 1.2% of Two Harbors Investments Corp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Bluerock Residential Growth REIT and Two Harbors Investments Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bluerock Residential Growth REIT 128.54% 30.92% 10.01%
Two Harbors Investments Corp 63.23% 10.27% 1.52%

Dividends

Two Harbors Investments Corp pays an annual dividend of $2.08 per share and has a dividend yield of 13.6%. Bluerock Residential Growth REIT does not pay a dividend. Two Harbors Investments Corp pays out 71.2% of its earnings in the form of a dividend.

Summary

Two Harbors Investments Corp beats Bluerock Residential Growth REIT on 7 of the 13 factors compared between the two stocks.

About Bluerock Residential Growth REIT

Bluerock Residential Growth REIT, Inc. is a real estate investment trust. The Company is focused on acquiring a portfolio of residential real estate assets. As of December 31, 2016, the Company’s portfolio consisted of interests in 31 properties (21 operating and 10 development properties). As of December 31, 2016, its properties contained an aggregate of 9,570 units, consisting of 6,972 operating units and 2,598 units under development. As of December 31, 2016, its operating properties included ARIUM at Palmer Ranch, Sarasota; ARIUM Grandewood, Orlando; ARIUM Gulfshore, Naples; ARIUM Palms, Orlando; ARIUM Pine Lakes, Port St. Lucie; ARIUM Westside, Atlanta; Ashton Reserve, Charlotte; Enders at Baldwin Park, Orlando; Fox Hill, Austin; Lansbrook Village, Palm Harbor; Legacy at Southpark, Austin; Nevadan, Atlanta; Roswell City Walk, Roswell; Sorrel, Frisco; Sovereign, Fort Worth; The Preserve at Henderson Beach, Destin; Village Green of Ann Arbor, Ann Arbor, and Whetstone, Durham.

About Two Harbors Investments Corp

Two Harbors Investment Corp. is a real estate investment trust. The Company is focused on investing in, financing and managing residential mortgage-backed securities (RMBS), mortgage servicing rights (MSR), commercial real estate and other financial assets (collectively known as target assets). Its investment objective is to provide attractive risk-adjusted total return to its stockholders over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses on managing various associated risks, including interest rate, prepayment, credit, mortgage spread and financing risk. The Company finances its RMBS and commercial real estate assets through short- and long-term borrowings structured as repurchase agreements and advances from the Federal Home Loan Bank of Des Moines, or the FHLB. It also finances its MSR through revolving credit facilities.

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