American Capital Mortgage Investment Corp. (NASDAQ: MTGE) and Capstead Mortgage Corporation (NYSE:CMO) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Dividends

American Capital Mortgage Investment Corp. pays an annual dividend of $1.80 per share and has a dividend yield of 9.2%. Capstead Mortgage Corporation pays an annual dividend of $0.76 per share and has a dividend yield of 7.8%. American Capital Mortgage Investment Corp. pays out 81.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Capstead Mortgage Corporation pays out 124.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Capital Mortgage Investment Corp. has increased its dividend for 3 consecutive years. American Capital Mortgage Investment Corp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares American Capital Mortgage Investment Corp. and Capstead Mortgage Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Capital Mortgage Investment Corp. $158.84 million 5.64 $101.67 million $2.22 8.81
Capstead Mortgage Corporation $88.27 million 10.65 $58.62 million $0.61 16.03

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

Profitability

This table compares American Capital Mortgage Investment Corp. and Capstead Mortgage Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Capital Mortgage Investment Corp. 104.38% 10.40% 1.77%
Capstead Mortgage Corporation 35.05% 7.31% 0.56%

Analyst Ratings

This is a summary of current recommendations for American Capital Mortgage Investment Corp. and Capstead Mortgage Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Capital Mortgage Investment Corp. 0 1 3 0 2.75
Capstead Mortgage Corporation 0 2 0 0 2.00

American Capital Mortgage Investment Corp. currently has a consensus target price of $20.00, suggesting a potential upside of 2.30%. Capstead Mortgage Corporation has a consensus target price of $11.00, suggesting a potential upside of 12.47%. Given Capstead Mortgage Corporation’s higher possible upside, analysts plainly believe Capstead Mortgage Corporation is more favorable than American Capital Mortgage Investment Corp..

Volatility and Risk

American Capital Mortgage Investment Corp. has a beta of 0.47, meaning that its stock price is 53% less volatile than the S&P 500. Comparatively, Capstead Mortgage Corporation has a beta of 0.38, meaning that its stock price is 62% less volatile than the S&P 500.

Institutional & Insider Ownership

73.9% of American Capital Mortgage Investment Corp. shares are owned by institutional investors. Comparatively, 72.6% of Capstead Mortgage Corporation shares are owned by institutional investors. 1.1% of American Capital Mortgage Investment Corp. shares are owned by insiders. Comparatively, 1.7% of Capstead Mortgage Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

American Capital Mortgage Investment Corp. beats Capstead Mortgage Corporation on 13 of the 17 factors compared between the two stocks.

American Capital Mortgage Investment Corp. Company Profile

MTGE Investment Corp., formerly American Capital Mortgage Investment Corp., is a real estate investment trust. The Company invests in, finances and manages a leveraged portfolio of real estate-related investments, which include agency residential mortgage-backed securities (RMBS), non-agency securities, other mortgage-related investments and other real estate investments. Agency RMBS includes residential mortgage pass-through certificates and collateralized mortgage obligations (CMOs) structured from residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a government-sponsored enterprise (GSE), or by a United States Government agency, such as Government National Mortgage Association (Ginnie Mae). Non-agency securities include securities backed by residential mortgages that are not guaranteed by a GSE or the United States Government agency, and credit risk transfer securities (CRT). The Company’s manager is MTGE Management, LLC.

Capstead Mortgage Corporation Company Profile

Capstead Mortgage Corporation operates as a self-managed real estate investment trust (REIT). The Company manages a leveraged portfolio of residential mortgage pass-through securities consisting of relatively short-duration adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac), or by an agency of the federal government, the Government National Mortgage Association (Ginnie Mae). The Company finances its residential mortgage investments by leveraging its long-term investment capital with secured borrowings consisting primarily of borrowings under repurchase arrangements with commercial banks and other financial institutions. The Company’s portfolio of residential mortgage investments includes residential mortgage investments.

Receive News & Ratings for American Capital Mortgage Investment Corp. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for American Capital Mortgage Investment Corp. and related companies with MarketBeat.com's FREE daily email newsletter.