MFA Financial (NYSE: MFA) and KKR Real Estate Finance Trust (NASDAQ:KREF) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, institutional ownership, profitability, analyst recommendations and dividends.

Earnings and Valuation

This table compares MFA Financial and KKR Real Estate Finance Trust’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MFA Financial $376.15 million 9.26 $309.13 million $0.78 11.27
KKR Real Estate Finance Trust $59.48 million 19.31 N/A N/A N/A

MFA Financial has higher revenue and earnings than KKR Real Estate Finance Trust.

Analyst Ratings

This is a summary of current ratings for MFA Financial and KKR Real Estate Finance Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MFA Financial 0 2 2 0 2.50
KKR Real Estate Finance Trust 0 3 0 0 2.00

MFA Financial presently has a consensus target price of $8.50, indicating a potential downside of 3.30%. KKR Real Estate Finance Trust has a consensus target price of $22.75, indicating a potential upside of 6.41%. Given KKR Real Estate Finance Trust’s higher possible upside, analysts clearly believe KKR Real Estate Finance Trust is more favorable than MFA Financial.

Dividends

MFA Financial pays an annual dividend of $0.80 per share and has a dividend yield of 9.1%. KKR Real Estate Finance Trust does not pay a dividend. MFA Financial pays out 102.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares MFA Financial and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MFA Financial 61.94% 10.12% 2.58%
KKR Real Estate Finance Trust 64.81% 6.60% 0.87%

Insider and Institutional Ownership

80.1% of MFA Financial shares are owned by institutional investors. 0.9% of MFA Financial 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.

Summary

MFA Financial beats KKR Real Estate Finance Trust on 8 of the 13 factors compared between the two stocks.

About MFA Financial

MFA Financial, Inc. is engaged in the real estate finance business. The Company’s subsidiaries invest in residential mortgage assets, including Non-Agency mortgage-backed securities (MBS), Agency MBS, residential whole loans and credit risk transfer (CRT) securities. The Company’s Non-Agency MBS portfolio primarily consists of Legacy Non-Agency MBS and 3 Year Step-up securities. In addition to Non-Agency MBS investments, the Company invests in re-performing and non-performing residential whole loans through its interests in certain consolidated trusts. The mortgages collateralizing its Agency MBS portfolio are predominantly Hybrids, 15-year fixed-rate mortgages and adjustable-rate mortgages (ARMs).

About KKR Real Estate Finance Trust

KKR Real Estate Finance Trust Inc is a real estate finance company that focuses primarily on originating and acquiring senior mortgage loans secured by commercial real estate assets (CRE). KKR manages investments across multiple asset classes, including private equity, real estate, energy, infrastructure, credit and hedge funds. The Company’s investment strategy is to originate or acquire senior mortgage loans collateralized by institutional-quality CRE assets. Its target assets also include mezzanine loans, preferred equity and other debt-oriented instruments. The Company’s investment objective is capital preservation and generating attractive risk-adjusted returns for its stockholders over the long term, primarily through dividends.

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