Capital Trust (NYSE: BXMT) and American Capital Mortgage Investment Corp. (NASDAQ:MTGE) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, valuation, profitability and risk.

Insider & Institutional Ownership

61.3% of Capital Trust shares are owned by institutional investors. Comparatively, 73.9% of American Capital Mortgage Investment Corp. shares are owned by institutional investors. 0.9% of Capital Trust shares are owned by company insiders. Comparatively, 1.1% of American Capital Mortgage Investment Corp. shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

Capital Trust has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500. Comparatively, 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.

Dividends

Capital Trust pays an annual dividend of $2.48 per share and has a dividend yield of 7.8%. American Capital Mortgage Investment Corp. pays an annual dividend of $1.80 per share and has a dividend yield of 9.2%. Capital Trust pays out 106.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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. Capital Trust has increased its dividend for 3 consecutive years. American Capital Mortgage Investment Corp. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent ratings and target prices for Capital Trust and American Capital Mortgage Investment Corp., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capital Trust 0 3 3 0 2.50
American Capital Mortgage Investment Corp. 0 1 3 0 2.75

Capital Trust currently has a consensus price target of $33.50, indicating a potential upside of 5.58%. American Capital Mortgage Investment Corp. has a consensus price target of $20.00, indicating a potential upside of 2.56%. Given Capital Trust’s higher possible upside, analysts clearly believe Capital Trust is more favorable than American Capital Mortgage Investment Corp..

Valuation & Earnings

This table compares Capital Trust and American Capital Mortgage Investment Corp.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Capital Trust $298.97 million 10.06 $220.95 million $2.33 13.62
American Capital Mortgage Investment Corp. $158.84 million 5.62 $101.67 million $2.22 8.78

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

Profitability

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

Net Margins Return on Equity Return on Assets
Capital Trust 55.05% 8.76% 2.43%
American Capital Mortgage Investment Corp. 104.38% 10.40% 1.77%

Summary

Capital Trust beats American Capital Mortgage Investment Corp. on 9 of the 16 factors compared between the two stocks.

Capital Trust Company Profile

Blackstone Mortgage Trust, Inc. is a holding company. The Company conducts its operations as a real estate investment trust for the United States federal income tax purposes. The Company originates and purchases senior loans collateralized by properties in North America and Europe. The Company’s business is focused on originating or acquiring senior, floating rate mortgage loans that are secured by a first priority mortgage on commercial real estate assets primarily in the office, lodging, retail, residential and industrial sectors. These investments may be in the form of whole loans or may also include pari passu participations within mortgage loans. It directly originates, co-originates and acquires debt instruments in conjunction with acquisitions, refinancings and recapitalizations of commercial real estate. The Company’s manager is BXMT Advisors L.L.C.

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.

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