Granite Point Mortgage Trust (NYSE: GPMT) and Invesco Mortgage Capital (NYSE:IVR) are both small-cap financials companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, risk, profitability and institutional ownership.
This is a breakdown of current ratings and price targets for Granite Point Mortgage Trust and Invesco Mortgage Capital, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Granite Point Mortgage Trust||0||1||4||0||2.80|
|Invesco Mortgage Capital||0||3||2||0||2.40|
Granite Point Mortgage Trust pays an annual dividend of $0.70 per share and has a dividend yield of 4.0%. Invesco Mortgage Capital pays an annual dividend of $1.68 per share and has a dividend yield of 10.3%. Granite Point Mortgage Trust pays out 56.9% of its earnings in the form of a dividend. Invesco Mortgage Capital pays out 52.8% 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. Invesco Mortgage Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares Granite Point Mortgage Trust and Invesco Mortgage Capital’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Granite Point Mortgage Trust||N/A||N/A||N/A||$1.23||14.09|
|Invesco Mortgage Capital||$456.86 million||3.99||$254.41 million||$3.18||5.14|
Invesco Mortgage Capital has higher revenue and earnings than Granite Point Mortgage Trust. Invesco Mortgage Capital is trading at a lower price-to-earnings ratio than Granite Point Mortgage Trust, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
42.2% of Granite Point Mortgage Trust shares are owned by institutional investors. Comparatively, 72.7% of Invesco Mortgage Capital shares are owned by institutional investors. 0.3% of Invesco Mortgage Capital shares are owned by company 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 Granite Point Mortgage Trust and Invesco Mortgage Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Granite Point Mortgage Trust||N/A||N/A||N/A|
|Invesco Mortgage Capital||66.86%||9.06%||1.09%|
Invesco Mortgage Capital beats Granite Point Mortgage Trust on 9 of the 13 factors compared between the two stocks.
About Granite Point Mortgage Trust
Granite Point Mortgage Trust Inc. is focused primarily on directly originating, investing in and managing senior floating-rate commercial mortgage loans and other debt, such as commercial real estate investments. The Company formed to continue and expand the commercial real estate lending business. The Company is a long-term, fundamental value-oriented investor. The Company constructs its own investment portfolio on a loan-by-loan basis, emphasizing rigorous credit underwriting, selectivity and diversification available in the market. The Company provides intermediate-term bridge or transitional financing for a variety of purposes, including acquisitions, recapitalizations, refinancing and a range of business plans including lease-up, renovation, repositioning and repurposing of the property. It generally targets the top 25-50, metropolitan statistical areas (MSA) in the United States.
About Invesco Mortgage Capital
Invesco Mortgage Capital Inc. is a holding company, which conducts its businesses through IAS Operating Partnership LP (the Operating Partnership) and subsidiaries. The Company’s objective is to provide risk-adjusted returns to its investors through dividends and through capital appreciation. It invests in residential mortgage-backed securities that are guaranteed by the United States Government agency, such as the Government National Mortgage Association or a federally chartered corporation, such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation (collectively Agency RMBS); RMBS that are not guaranteed by the United States Government agency; Credit risk transfer securities that are unsecured obligations issued by government-sponsored enterprises; commercial mortgage-backed securities; residential and commercial mortgage loans, and other real estate-related financing arrangements. It is externally managed and advised by Invesco Advisers, Inc.
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