PennyMac Mortgage Investment Trust (PMT) & Chimera Investment Corporation (CIM) Critical Review
PennyMac Mortgage Investment Trust (NYSE: PMT) and Chimera Investment Corporation (NYSE:CIM) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, dividends, profitability, earnings and valuation.
Volatility and Risk
PennyMac Mortgage Investment Trust has a beta of 0.51, meaning that its stock price is 49% less volatile than the S&P 500. Comparatively, Chimera Investment Corporation has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500.
Valuation and Earnings
This table compares PennyMac Mortgage Investment Trust and Chimera Investment Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|PennyMac Mortgage Investment Trust||$318.72 million||3.56||$114.30 million||$1.71||9.92|
|Chimera Investment Corporation||$933.35 million||3.84||$655.36 million||$3.49||5.47|
Chimera Investment Corporation has higher revenue and earnings than PennyMac Mortgage Investment Trust. Chimera Investment Corporation is trading at a lower price-to-earnings ratio than PennyMac Mortgage Investment Trust, indicating that it is currently the more affordable of the two stocks.
This table compares PennyMac Mortgage Investment Trust and Chimera Investment Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|PennyMac Mortgage Investment Trust||37.97%||8.67%||1.95%|
|Chimera Investment Corporation||63.94%||14.27%||2.52%|
This is a summary of recent ratings and target prices for PennyMac Mortgage Investment Trust and Chimera Investment Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|PennyMac Mortgage Investment Trust||0||4||3||0||2.43|
|Chimera Investment Corporation||0||3||0||0||2.00|
PennyMac Mortgage Investment Trust presently has a consensus price target of $16.95, indicating a potential downside of 0.06%. Chimera Investment Corporation has a consensus price target of $18.50, indicating a potential downside of 3.09%. Given PennyMac Mortgage Investment Trust’s stronger consensus rating and higher probable upside, equities analysts clearly believe PennyMac Mortgage Investment Trust is more favorable than Chimera Investment Corporation.
PennyMac Mortgage Investment Trust pays an annual dividend of $1.88 per share and has a dividend yield of 11.1%. Chimera Investment Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 10.5%. PennyMac Mortgage Investment Trust pays out 109.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chimera Investment Corporation pays out 57.3% of its earnings in the form of a dividend. Chimera Investment Corporation has raised its dividend for 2 consecutive years.
Institutional and Insider Ownership
62.5% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. Comparatively, 52.2% of Chimera Investment Corporation shares are owned by institutional investors. 1.8% of PennyMac Mortgage Investment Trust shares are owned by insiders. Comparatively, 0.7% of Chimera Investment Corporation shares are owned by 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.
Chimera Investment Corporation beats PennyMac Mortgage Investment Trust on 10 of the 17 factors compared between the two stocks.
PennyMac Mortgage Investment Trust Company Profile
PennyMac Mortgage Investment Trust is a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. The Company conducts all of its operations, and makes all of its investments, through PennyMac Operating Partnership, L.P. (its Operating Partnership) and its subsidiaries. It operates through two segments: correspondent production and investment activities. Its investment activities segment represents the Company’s investments in mortgage-related assets. The correspondent production segment represents the Company’s operations aimed at serving as an intermediary between mortgage lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality mortgage loans either directly or in the form of MBS, using the services of PNMAC Capital Management (the Manager or PCM) and PennyMac Loan Services, LLC (PLS), both indirect subsidiaries of PennyMac Financial Services, Inc. (PFSI or PennyMac).
Chimera Investment Corporation Company Profile
Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.
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