Reviewing Hatteras Financial Corp. (HTS) and CYS Investments (CYS)

Hatteras Financial Corp. (NYSE: HTS) and CYS Investments (NYSE:CYS) are both small-cap mortgage reits companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, earnings, institutional ownership and risk.

Institutional and Insider Ownership

61.3% of CYS Investments shares are owned by institutional investors. 1.0% of CYS Investments shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.


Hatteras Financial Corp. pays an annual dividend of $1.80 per share and has a dividend yield of 11.0%. CYS Investments pays an annual dividend of $1.00 per share and has a dividend yield of 12.6%. Hatteras Financial Corp. pays out -2,000.0% of its earnings in the form of a dividend. CYS Investments pays out -500.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Recommendations

This is a breakdown of recent ratings for Hatteras Financial Corp. and CYS Investments, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hatteras Financial Corp. 0 0 0 0 N/A
CYS Investments 1 3 0 0 1.75

CYS Investments has a consensus target price of $8.00, indicating a potential upside of 0.50%. Given CYS Investments’ higher possible upside, analysts clearly believe CYS Investments is more favorable than Hatteras Financial Corp..

Valuation and Earnings

This table compares Hatteras Financial Corp. and CYS Investments’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Hatteras Financial Corp. N/A N/A N/A ($0.09) -181.00
CYS Investments $294.54 million 4.19 $16.39 million ($0.20) -39.80

CYS Investments has higher revenue and earnings than Hatteras Financial Corp.. Hatteras Financial Corp. is trading at a lower price-to-earnings ratio than CYS Investments, indicating that it is currently the more affordable of the two stocks.


This table compares Hatteras Financial Corp. and CYS Investments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hatteras Financial Corp. N/A -16.93% -1.89%
CYS Investments -2.59% 13.30% 1.37%


CYS Investments beats Hatteras Financial Corp. on 7 of the 10 factors compared between the two stocks.

Hatteras Financial Corp. Company Profile

Hatteras Financial Corp. is an externally managed mortgage real estate investment trust (REIT) that invests in single-family residential mortgage real estate assets, such as mortgage-backed security (MBS), mortgage servicing right (MSR), residential mortgage loans and other financial assets. MBS are pass-through securities consisting of a pool of mortgage loans. Its primary business is owning and managing agency securities, with a primary focus on adjustable-rate mortgage securities. Its primary investment assets include Agency MBS; other agency issued securities, such as credit-risk transfer bonds; MSR; non-agency securities; residential mortgage loans, and other real estate related assets as permitted by its investment guidelines and REIT requirements. Its business operations consist of the Hatteras Financial Corp., Onslow Bay Financial LLC, First Winston Securities, Inc. and Wind River TRS LLC. It is externally managed and advised by its manager, Atlantic Capital Advisors LLC.

CYS Investments Company Profile

CYS Investments, Inc. is a specialty finance company. The Company’s objective is to provide consistent returns to its investors through a combination of dividends and capital appreciation. It invests in agency residential mortgage-backed security (RMBS) collateralized by fixed rate single-family residential mortgage loans; adjustable-rate mortgages (ARMs), which have coupon rates that reset monthly, or hybrid ARMs, which have a coupon rate that is fixed for an initial period. In addition, it has investments in collateralized mortgage obligations issued by a government agency or government-sponsored entity (GSE) that are collateralized by Agency RMBS. Its investments consist of residential mortgage pass-through securities for which the principal and interest payments are guaranteed by a GSE, such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, or by the United States Government agency, such as Government National Mortgage Association.

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