New Residential Investment Corp. (NYSE: NRZ) and PennyMac Mortgage Investment Trust (NYSE:PMT) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.

Dividends

New Residential Investment Corp. pays an annual dividend of $2.00 per share and has a dividend yield of 11.4%. PennyMac Mortgage Investment Trust pays an annual dividend of $1.88 per share and has a dividend yield of 12.1%. New Residential Investment Corp. pays out 64.7% of its earnings in the form of a dividend. PennyMac Mortgage Investment Trust pays out 109.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PennyMac Mortgage Investment Trust has increased its dividend for 3 consecutive years. PennyMac Mortgage Investment Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

48.1% of New Residential Investment Corp. shares are owned by institutional investors. Comparatively, 63.3% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. 4.0% of New Residential Investment Corp. shares are owned by company insiders. Comparatively, 1.8% of PennyMac Mortgage Investment Trust 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.

Profitability

This table compares New Residential Investment Corp. and PennyMac Mortgage Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
New Residential Investment Corp. 60.06% 19.38% 3.99%
PennyMac Mortgage Investment Trust 37.97% 8.67% 1.95%

Valuation & Earnings

This table compares New Residential Investment Corp. and PennyMac Mortgage Investment Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
New Residential Investment Corp. $1.08 billion 5.00 $504.45 million $3.09 5.67
PennyMac Mortgage Investment Trust $272.09 million 3.81 $75.81 million $1.71 9.07

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

Analyst Recommendations

This is a summary of current ratings for New Residential Investment Corp. and PennyMac Mortgage Investment Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
New Residential Investment Corp. 0 2 5 0 2.71
PennyMac Mortgage Investment Trust 0 4 2 0 2.33

New Residential Investment Corp. currently has a consensus target price of $17.63, suggesting a potential upside of 0.66%. PennyMac Mortgage Investment Trust has a consensus target price of $17.00, suggesting a potential upside of 9.61%. Given PennyMac Mortgage Investment Trust’s higher probable upside, analysts clearly believe PennyMac Mortgage Investment Trust is more favorable than New Residential Investment Corp..

Risk and Volatility

New Residential Investment Corp. has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500. Comparatively, PennyMac Mortgage Investment Trust has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500.

Summary

New Residential Investment Corp. beats PennyMac Mortgage Investment Trust on 12 of the 17 factors compared between the two stocks.

New Residential Investment Corp. Company Profile

New Residential Investment Corp. is a real estate investment trust (REIT). The Company focuses on investing in, and managing, investments related to residential real estate. The Company’s segments include investments in excess mortgage servicing rights (Excess MSRs); investments in mortgage servicing rights (MSRs); investments in servicer advances; investments in real estate securities; investments in residential mortgage loans; investments in consumer loans, and corporate. Its portfolio includes mortgage servicing related assets, residential mortgage backed securities (RMBS), residential mortgage loans and other investments. The Company’s servicing related assets include its investments in Excess MSRs, MSRs and servicer advances. The Company invests in agency RMBS and non-agency RMBS. The Company’s other investments consist of consumer loans.

PennyMac Mortgage Investment Trust Company Profile

PennyMac Mortgage Investment Trust is a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. The Company conducts all of its operations, and makes all of its investments, through PennyMac Operating Partnership, L.P. (its Operating Partnership) and its subsidiaries. It operates through two segments: correspondent production and investment activities. Its investment activities segment represents the Company’s investments in mortgage-related assets. The correspondent production segment represents the Company’s operations aimed at serving as an intermediary between mortgage lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality mortgage loans either directly or in the form of MBS, using the services of PNMAC Capital Management (the Manager or PCM) and PennyMac Loan Services, LLC (PLS), both indirect subsidiaries of PennyMac Financial Services, Inc. (PFSI or PennyMac).

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