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

Institutional and Insider Ownership

62.7% of CYS Investments shares are owned by institutional investors. Comparatively, 75.3% of Great Ajax Corp. shares are owned by institutional investors. 1.0% of CYS Investments shares are owned by company insiders. Comparatively, 3.8% of Great Ajax Corp. shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares CYS Investments 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
CYS Investments $6.14 million 215.76 -$37.94 million ($0.25) -34.92
Great Ajax Corp. $50.65 million 4.93 $27.67 million $1.57 9.03

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

Dividends

CYS Investments pays an annual dividend of $1.00 per share and has a dividend yield of 11.5%. Great Ajax Corp. pays an annual dividend of $1.20 per share and has a dividend yield of 8.5%. CYS Investments pays out -400.0% of its earnings in the form of a dividend. Great Ajax Corp. pays out 76.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CYS Investments is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

CYS Investments has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500. Comparatively, Great Ajax Corp. has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for CYS Investments and Great Ajax Corp., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CYS Investments 1 3 0 0 1.75
Great Ajax Corp. 0 2 2 0 2.50

CYS Investments presently has a consensus target price of $8.00, indicating a potential downside of 8.36%. Great Ajax Corp. has a consensus target price of $15.13, indicating a potential upside of 6.74%. Given Great Ajax Corp.’s stronger consensus rating and higher possible upside, analysts clearly believe Great Ajax Corp. is more favorable than CYS Investments.

Profitability

This table compares CYS Investments and Great Ajax Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CYS Investments -5.86% 12.69% 1.39%
Great Ajax Corp. 58.46% 10.22% 3.02%

Summary

Great Ajax Corp. beats CYS Investments on 12 of the 16 factors compared between the two stocks.

CYS Investments Company Profile

CYS Investments, Inc. is a specialty finance company. The Company’s objective is to provide consistent returns to its investors through a combination of dividends and capital appreciation. It invests in agency residential mortgage-backed security (RMBS) collateralized by fixed rate single-family residential mortgage loans; adjustable-rate mortgages (ARMs), which have coupon rates that reset monthly, or hybrid ARMs, which have a coupon rate that is fixed for an initial period. In addition, it has investments in collateralized mortgage obligations issued by a government agency or government-sponsored entity (GSE) that are collateralized by Agency RMBS. Its investments consist of residential mortgage pass-through securities for which the principal and interest payments are guaranteed by a GSE, such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, or by the United States Government agency, such as Government National Mortgage Association.

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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