Chimera Investment Corporation (NYSE: CIM) and Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, earnings, valuation, profitability and analyst recommendations.

Earnings and Valuation

This table compares Chimera Investment Corporation and Cherry Hill Mortgage Investment Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Chimera Investment Corporation $933.35 million 3.84 $655.36 million $3.49 5.47
Cherry Hill Mortgage Investment Corporation $65.25 million 3.53 $88.70 million $6.98 2.59

Chimera Investment Corporation has higher revenue and earnings than Cherry Hill Mortgage Investment Corporation. Cherry Hill Mortgage Investment Corporation is trading at a lower price-to-earnings ratio than Chimera Investment Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

52.2% of Chimera Investment Corporation shares are held by institutional investors. Comparatively, 62.4% of Cherry Hill Mortgage Investment Corporation shares are held by institutional investors. 0.7% of Chimera Investment Corporation shares are held by company insiders. Comparatively, 8.9% of Cherry Hill Mortgage Investment Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Chimera Investment Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 10.5%. Cherry Hill Mortgage Investment Corporation pays an annual dividend of $1.96 per share and has a dividend yield of 10.8%. Chimera Investment Corporation pays out 57.3% of its earnings in the form of a dividend. Cherry Hill Mortgage Investment Corporation pays out 28.1% 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. Cherry Hill Mortgage Investment Corporation has raised its dividend for 2 consecutive years. Cherry Hill Mortgage Investment Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Chimera Investment Corporation and Cherry Hill Mortgage Investment Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chimera Investment Corporation 63.94% 14.27% 2.52%
Cherry Hill Mortgage Investment Corporation 138.90% 9.49% 1.81%

Analyst Recommendations

This is a summary of recent recommendations and price targets for Chimera Investment Corporation and Cherry Hill Mortgage Investment Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chimera Investment Corporation 0 3 0 0 2.00
Cherry Hill Mortgage Investment Corporation 0 2 2 0 2.50

Chimera Investment Corporation currently has a consensus target price of $18.50, indicating a potential downside of 3.09%. Cherry Hill Mortgage Investment Corporation has a consensus target price of $18.50, indicating a potential upside of 2.15%. Given Cherry Hill Mortgage Investment Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Cherry Hill Mortgage Investment Corporation is more favorable than Chimera Investment Corporation.

Risk & Volatility

Chimera Investment Corporation has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, Cherry Hill Mortgage Investment Corporation has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500.

Summary

Cherry Hill Mortgage Investment Corporation beats Chimera Investment Corporation on 11 of the 17 factors compared between the two stocks.

About Chimera Investment Corporation

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.

About Cherry Hill Mortgage Investment Corporation

Cherry Hill Mortgage Investment Corporation is a residential real estate finance company. The Company is focused on acquiring, investing in and managing residential mortgage assets in the United States. Its principal objective is to generate attractive current yields and risk-adjusted total returns for its stockholders over the long term, primarily through dividend distributions and secondarily through capital appreciation. The Company focuses on attaining this objective, subject to market conditions and availability and terms of financing, by selectively constructing and managing a targeted portfolio of Servicing Related Assets, residential mortgage-backed securities (RMBS), prime mortgage loans and other cashflowing residential mortgage assets. The Company operates its business through segments, including investments in RMBS; investments in Servicing Related Assets, and All Other. The Company is externally managed by Cherry Hill Mortgage Management, LLC.

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