Invesco Mortgage Capital (IVR) and New Residential Investment Corp. (NRZ) Critical Analysis
Invesco Mortgage Capital (NYSE: IVR) and New Residential Investment Corp. (NYSE:NRZ) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, risk, institutional ownership and valuation.
Invesco Mortgage Capital pays an annual dividend of $1.60 per share and has a dividend yield of 9.5%. New Residential Investment Corp. pays an annual dividend of $2.00 per share and has a dividend yield of 12.2%. Invesco Mortgage Capital pays out 36.9% of its earnings in the form of a dividend. New Residential Investment Corp. pays out 72.2% 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 has increased its dividend for 3 consecutive years.
Risk & Volatility
Invesco Mortgage Capital has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500. Comparatively, New Residential Investment Corp. has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.
This is a breakdown of current recommendations and price targets for Invesco Mortgage Capital and New Residential Investment Corp., as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Invesco Mortgage Capital||0||2||2||0||2.50|
|New Residential Investment Corp.||0||2||6||0||2.75|
Invesco Mortgage Capital currently has a consensus price target of $17.75, suggesting a potential upside of 5.91%. New Residential Investment Corp. has a consensus price target of $16.86, suggesting a potential upside of 3.04%. Given Invesco Mortgage Capital’s higher probable upside, equities research analysts clearly believe Invesco Mortgage Capital is more favorable than New Residential Investment Corp..
Earnings & Valuation
This table compares Invesco Mortgage Capital and New Residential Investment Corp.’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Invesco Mortgage Capital||$609.31 million||3.07||$484.39 million||$4.34||3.86|
|New Residential Investment Corp.||$1.30 billion||3.87||$851.39 million||$2.77||5.91|
New Residential Investment Corp. has higher revenue and earnings than Invesco Mortgage Capital. Invesco Mortgage Capital is trading at a lower price-to-earnings ratio than New Residential Investment Corp., indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
63.4% of Invesco Mortgage Capital shares are held by institutional investors. Comparatively, 47.8% of New Residential Investment Corp. shares are held by institutional investors. 0.3% of Invesco Mortgage Capital shares are held by company insiders. Comparatively, 4.0% of New Residential Investment Corp. shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This table compares Invesco Mortgage Capital and New Residential Investment Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Invesco Mortgage Capital||71.92%||8.97%||1.11%|
|New Residential Investment Corp.||55.85%||19.02%||3.80%|
New Residential Investment Corp. beats Invesco Mortgage Capital on 10 of the 17 factors compared between the two stocks.
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.
About New Residential Investment Corp.
New Residential Investment Corp. is a real estate investment trust (REIT). The Company focuses on investing in, and managing, investments related to residential real estate. The Company’s segments include investments in excess mortgage servicing rights (Excess MSRs); investments in mortgage servicing rights (MSRs); investments in servicer advances; investments in real estate securities; investments in residential mortgage loans; investments in consumer loans, and corporate. Its portfolio includes mortgage servicing related assets, residential mortgage backed securities (RMBS), residential mortgage loans and other investments. The Company’s servicing related assets include its investments in Excess MSRs, MSRs and servicer advances. The Company invests in agency RMBS and non-agency RMBS. The Company’s other investments consist of consumer loans.
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