Annaly Capital Management (NYSE: NLY) and Five Oaks Investment Corp. (NYSE:OAKS) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, earnings, risk, profitability, analyst recommendations, institutional ownership and dividends.

Earnings & Valuation

This table compares Annaly Capital Management and Five Oaks Investment Corp.’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Annaly Capital Management $2.21 billion 5.86 $1.43 billion $2.50 4.49
Five Oaks Investment Corp. $77.03 million 1.16 -$7.98 million $0.67 6.03

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

Dividends

Annaly Capital Management pays an annual dividend of $1.20 per share and has a dividend yield of 10.7%. Five Oaks Investment Corp. pays an annual dividend of $0.60 per share and has a dividend yield of 14.9%. Annaly Capital Management pays out 48.0% of its earnings in the form of a dividend. Five Oaks Investment Corp. pays out 89.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Annaly Capital Management and Five Oaks Investment Corp., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Annaly Capital Management 1 3 2 0 2.17
Five Oaks Investment Corp. 0 2 0 0 2.00

Annaly Capital Management presently has a consensus price target of $11.25, suggesting a potential upside of 0.18%. Given Annaly Capital Management’s stronger consensus rating and higher probable upside, equities analysts clearly believe Annaly Capital Management is more favorable than Five Oaks Investment Corp..

Risk and Volatility

Annaly Capital Management has a beta of 0.23, meaning that its share price is 77% less volatile than the S&P 500. Comparatively, Five Oaks Investment Corp. has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500.

Institutional & Insider Ownership

49.7% of Annaly Capital Management shares are held by institutional investors. Comparatively, 33.8% of Five Oaks Investment Corp. shares are held by institutional investors. 0.4% of Annaly Capital Management shares are held by insiders. Comparatively, 0.9% of Five Oaks Investment Corp. shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Annaly Capital Management and Five Oaks Investment Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Annaly Capital Management 104.56% 11.85% 1.57%
Five Oaks Investment Corp. 12.65% 10.48% 0.48%

Summary

Annaly Capital Management beats Five Oaks Investment Corp. on 13 of the 16 factors compared between the two stocks.

About Annaly Capital Management

Annaly Capital Management, Inc. is a mortgage real estate investment trust (REIT). The Company owns a portfolio of real estate related investments. Its investment groups primarily consist of Agency, which invests primarily in various types of Agency mortgage-backed securities and related derivatives to hedge these investments; Residential credit, which invests primarily in non-Agency mortgage-backed assets within securitized products and residential mortgage loan markets; Commercial real estate, which originates and invests in commercial mortgage loans, securities, and other commercial real estate investments, and Middle market, which provides customized debt financing to middle-market businesses. Its business operations consist of Annaly Commercial Real Estate Group, Inc., which is its subsidiary that specializes in originating or acquiring, financing and managing commercial loans and other commercial real estate debt; Annaly Middle Market Lending LLC, and RCap Securities, Inc.

About Five Oaks Investment Corp.

Five Oaks Investment Corp. is a real estate investment trust. The Company is focused on investing on a leveraged basis in mortgage and other real estate-related assets, particularly residential mortgage loans and mortgage-backed securities (MBS). The Company invests in various assets, such as Agency residential MBS (RMBS); securitizations backed by multi-family mortgage loans, or Multi-Family MBS; residential mortgage loans and other mortgage-related investments, including mortgage servicing rights (MSRs), and Non-Agency RMBS. The Company finances its investments in Agency RMBS, Multi-Family MBS, residential mortgage loans and Non-Agency RMBS primarily through short-term borrowings structured as repurchase agreements. The Company is externally managed and advised by Oak Circle Capital Partners LLC.

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