Five Oaks Investment Corp. (NYSE: OAKS) and Great Ajax Corp. (NYSE:AJX) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitabiliy, analyst recommendations, institutional ownership, dividends, risk, earnings and valuation.

Risk & Volatility

Five Oaks Investment Corp. has a beta of 1.29, suggesting that its share price is 29% more volatile than the S&P 500. Comparatively, Great Ajax Corp. has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500.

Profitability

This table compares Five Oaks Investment Corp. and Great Ajax Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Five Oaks Investment Corp. 11.47% 11.34% 0.53%
Great Ajax Corp. 60.91% 10.27% 3.36%

Institutional & Insider Ownership

30.0% of Five Oaks Investment Corp. shares are owned by institutional investors. Comparatively, 71.9% of Great Ajax Corp. shares are owned by institutional investors. 0.9% of Five Oaks Investment Corp. shares are owned by insiders. Comparatively, 3.8% of Great Ajax Corp. shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Five Oaks Investment Corp. and Great Ajax Corp.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Five Oaks Investment Corp. $25.35 million 3.38 $8.77 million $0.50 9.76
Great Ajax Corp. $48.32 million 5.17 $29.62 million $1.63 8.44

Great Ajax Corp. has higher revenue and earnings than Five Oaks Investment Corp.. Great Ajax Corp. is trading at a lower price-to-earnings ratio than Five Oaks Investment Corp., indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for Five Oaks Investment Corp. and Great Ajax Corp., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Five Oaks Investment Corp. 0 2 0 0 2.00
Great Ajax Corp. 0 2 2 0 2.50

Five Oaks Investment Corp. presently has a consensus target price of $6.50, suggesting a potential upside of 33.20%. Great Ajax Corp. has a consensus target price of $15.70, suggesting a potential upside of 14.10%. Given Five Oaks Investment Corp.’s higher possible upside, research analysts clearly believe Five Oaks Investment Corp. is more favorable than Great Ajax Corp..

Dividends

Five Oaks Investment Corp. pays an annual dividend of $0.60 per share and has a dividend yield of 12.3%. Great Ajax Corp. pays an annual dividend of $1.12 per share and has a dividend yield of 8.1%. Five Oaks Investment Corp. pays out 120.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Great Ajax Corp. pays out 68.7% of its earnings in the form of a dividend.

Summary

Great Ajax Corp. beats Five Oaks Investment Corp. on 12 of the 16 factors compared between the two stocks.

Five Oaks Investment Corp. Company Profile

Five Oaks Investment Corp. is a real estate investment trust. The Company is focused on investing on a leveraged basis in mortgage and other real estate-related assets, particularly residential mortgage loans and mortgage-backed securities (MBS). The Company invests in various assets, such as Agency residential MBS (RMBS); securitizations backed by multi-family mortgage loans, or Multi-Family MBS; residential mortgage loans and other mortgage-related investments, including mortgage servicing rights (MSRs), and Non-Agency RMBS. The Company finances its investments in Agency RMBS, Multi-Family MBS, residential mortgage loans and Non-Agency RMBS primarily through short-term borrowings structured as repurchase agreements. The Company is externally managed and advised by Oak Circle Capital Partners LLC.

Great Ajax Corp. Company Profile

Great Ajax Corp. is an externally managed real estate company. The Company is focused on acquiring, investing in and managing a portfolio of re-performing and non-performing mortgage loans secured by single-family residences and single-family properties. Its segment is focused on non-performing mortgages and re-performing mortgages. It also invests in loans secured by multi-family residential and commercial mixed use retail/residential properties, as well as in the properties directly. It also holds real estate-owned properties (REO) acquired upon the foreclosure or other settlement of its owned non-performing loans, as well as through outright purchases. It is managed by Thetis Asset Management LLC, an affiliated entity. Its mortgage loans and other real estate assets are serviced by Gregory Funding LLC, an affiliated entity. The Company conducts its business through its operating partnership, Great Ajax Operating Partnership L.P.

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