Pennymac Mortgage Investment (NYSE: PMT) and Annaly Capital Management (NYSE:NLY) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, risk and dividends.
Volatility and Risk
Pennymac Mortgage Investment has a beta of 0.38, indicating that its stock price is 62% less volatile than the S&P 500. Comparatively, Annaly Capital Management has a beta of 0.02, indicating that its stock price is 98% less volatile than the S&P 500.
Pennymac Mortgage Investment pays an annual dividend of $1.88 per share and has a dividend yield of 10.5%. Annaly Capital Management pays an annual dividend of $1.20 per share and has a dividend yield of 11.6%. Pennymac Mortgage Investment pays out 144.6% 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 pays out 98.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Annaly Capital Management is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares Pennymac Mortgage Investment and Annaly Capital Management’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Pennymac Mortgage Investment||$317.94 million||3.42||$117.74 million||$1.30||13.78|
|Annaly Capital Management||$1.48 billion||8.08||$1.57 billion||$1.22||8.48|
Annaly Capital Management has higher revenue and earnings than Pennymac Mortgage Investment. Annaly Capital Management is trading at a lower price-to-earnings ratio than Pennymac Mortgage Investment, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent recommendations and price targets for Pennymac Mortgage Investment and Annaly Capital Management, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Pennymac Mortgage Investment||0||1||0||0||2.00|
|Annaly Capital Management||0||3||0||0||2.00|
Pennymac Mortgage Investment presently has a consensus target price of $18.00, indicating a potential upside of 0.50%. Annaly Capital Management has a consensus target price of $11.25, indicating a potential upside of 8.70%. Given Annaly Capital Management’s higher probable upside, analysts plainly believe Annaly Capital Management is more favorable than Pennymac Mortgage Investment.
Insider and Institutional Ownership
65.0% of Pennymac Mortgage Investment shares are owned by institutional investors. Comparatively, 60.1% of Annaly Capital Management shares are owned by institutional investors. 2.1% of Pennymac Mortgage Investment shares are owned by company insiders. Comparatively, 0.4% of Annaly Capital Management shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
This table compares Pennymac Mortgage Investment and Annaly Capital Management’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Pennymac Mortgage Investment||34.34%||7.03%||1.64%|
|Annaly Capital Management||72.18%||11.66%||1.53%|
Annaly Capital Management beats Pennymac Mortgage Investment on 8 of the 14 factors compared between the two stocks.
About Pennymac Mortgage Investment
PennyMac Mortgage Investment Trust, a specialty finance company, invests primarily in residential mortgage loans and mortgage-related assets in the United States. The company's Correspondent Production segment engages in purchasing, pooling, and reselling newly originated prime credit mortgage loans directly or in the form of mortgage-backed securities (MBS). Its Credit Sensitive Strategies segment invests in credit risk transfer agreements, distressed mortgage loans, real estate acquired in settlement of mortgage loans, non-Agency subordinated bonds, and small balance commercial real estate mortgage loans. The company's Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency MBS; and the related interest rate hedging activities. PNMAC Capital Management, LLC acts as the manager of PennyMac Mortgage Investment Trust. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. PennyMac Mortgage Investment Trust was founded in 2009 and is based in Westlake Village, California.
About Annaly Capital Management
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.
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