Apollo Residential Mortgage (NYSE: AMTG) and iStar Financial (NYSE:STAR) are both financials companies, but which is the better business? We will compare the two companies based on the strength of their profitability, risk, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Dividends

Apollo Residential Mortgage pays an annual dividend of $1.92 per share and has a dividend yield of 14.1%. iStar Financial does not pay a dividend. Apollo Residential Mortgage pays out -206.4% of its earnings in the form of a dividend. Apollo Residential Mortgage has increased its dividend for 2 consecutive years.

Institutional & Insider Ownership

83.4% of iStar Financial shares are owned by institutional investors. 4.4% of iStar Financial 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.

Profitability

This table compares Apollo Residential Mortgage and iStar Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Apollo Residential Mortgage 56.35% 10.11% 2.60%
iStar Financial 32.82% 22.21% 4.79%

Valuation & Earnings

This table compares Apollo Residential Mortgage and iStar Financial’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Apollo Residential Mortgage N/A N/A N/A ($0.93) -14.67
iStar Financial $626.30 million 1.39 $243.53 million $1.83 6.57

iStar Financial has higher revenue and earnings than Apollo Residential Mortgage. Apollo Residential Mortgage is trading at a lower price-to-earnings ratio than iStar Financial, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Apollo Residential Mortgage and iStar Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Apollo Residential Mortgage 0 0 0 0 N/A
iStar Financial 0 2 0 0 2.00

iStar Financial has a consensus price target of $14.00, indicating a potential upside of 16.38%. Given iStar Financial’s higher probable upside, analysts plainly believe iStar Financial is more favorable than Apollo Residential Mortgage.

Risk & Volatility

Apollo Residential Mortgage has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, iStar Financial has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500.

Summary

iStar Financial beats Apollo Residential Mortgage on 8 of the 12 factors compared between the two stocks.

Apollo Residential Mortgage Company Profile

Apollo Residential Mortgage, Inc. is a holding company that conducts its business primarily through ARM Operating, LLC and other operating subsidiaries. The Company is primarily engaged in the business of investing in residential mortgage assets in the United States. The Company seeks to generate risk-adjusted returns from its assets to its stockholders over the long term, primarily through dividend distributions and secondarily through capital appreciation. The Company’s portfolio consists of agency residential mortgage-backed securities (RMBS), non-Agency RMBS; securitized mortgage loans, and other mortgage and mortgage related investment securities and other mortgage related investments. The Company may invest in a range of other residential mortgage and mortgage-related assets. The Company is externally managed and advised by ARM Manager, LLC, an indirect subsidiary of Apollo Global Management, LLC.

iStar Financial Company Profile

iStar Inc. finances, invests in and develops real estate and real estate related projects as part of its integrated investment platform. The Company’s four business segments are Real Estate Finance, Net Lease, Operating Properties, and Land and Development. The Real Estate Finance portfolio consists of senior and mezzanine real estate loans that may be either fixed-rate or variable-rate. The Net Lease portfolio consists of properties owned by the Company and leased to single tenants, where the properties are subject to long-term leases. The Operating Properties portfolio consists of commercial and residential properties, which represent a pool of assets across a range of geographies and property types. The Land and Development portfolio consists of land entitled for master planned communities, as well as waterfront and urban infill land parcels located throughout the United States. Its Land and Development projects include Great Oaks, Sage Scottsdale, Naples Reserve and Coney Island.

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