CYS Investments (NYSE: CYS) and MTGE Investment Corp. (NASDAQ:MTGE) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, institutional ownership, dividends, valuation, earnings, profitability and analyst recommendations.

Profitability

This table compares CYS Investments and MTGE Investment Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CYS Investments -2.59% 13.30% 1.37%
MTGE Investment Corp. 89.01% 10.52% 1.72%

Valuation & Earnings

This table compares CYS Investments and MTGE Investment Corp.’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
CYS Investments $294.54 million 4.38 $16.39 million ($0.20) -41.65
MTGE Investment Corp. $108.19 million 7.82 $43.67 million $1.80 10.26

MTGE Investment Corp. has higher revenue, but lower earnings than CYS Investments. CYS Investments is trading at a lower price-to-earnings ratio than MTGE Investment Corp., indicating that it is currently the more affordable of the two stocks.

Dividends

CYS Investments pays an annual dividend of $1.00 per share and has a dividend yield of 12.0%. MTGE Investment Corp. pays an annual dividend of $1.80 per share and has a dividend yield of 9.7%. CYS Investments pays out -500.0% of its earnings in the form of a dividend. MTGE Investment Corp. pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CYS Investments is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings for CYS Investments and MTGE Investment Corp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CYS Investments 1 3 0 0 1.75
MTGE Investment Corp. 0 1 3 0 2.75

CYS Investments presently has a consensus price target of $8.00, suggesting a potential downside of 3.96%. MTGE Investment Corp. has a consensus price target of $20.50, suggesting a potential upside of 10.96%. Given MTGE Investment Corp.’s stronger consensus rating and higher probable upside, analysts plainly believe MTGE Investment Corp. is more favorable than CYS Investments.

Volatility and Risk

CYS Investments has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500. Comparatively, MTGE Investment Corp. has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500.

Insider and Institutional Ownership

59.9% of CYS Investments shares are owned by institutional investors. Comparatively, 75.7% of MTGE Investment Corp. shares are owned by institutional investors. 1.0% of CYS Investments shares are owned by company insiders. Comparatively, 1.1% of MTGE 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.

Summary

MTGE Investment Corp. beats CYS Investments on 11 of the 16 factors compared between the two stocks.

CYS Investments Company Profile

CYS Investments, Inc. is a specialty finance company. The Company’s objective is to provide consistent returns to its investors through a combination of dividends and capital appreciation. It invests in agency residential mortgage-backed security (RMBS) collateralized by fixed rate single-family residential mortgage loans; adjustable-rate mortgages (ARMs), which have coupon rates that reset monthly, or hybrid ARMs, which have a coupon rate that is fixed for an initial period. In addition, it has investments in collateralized mortgage obligations issued by a government agency or government-sponsored entity (GSE) that are collateralized by Agency RMBS. Its investments consist of residential mortgage pass-through securities for which the principal and interest payments are guaranteed by a GSE, such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, or by the United States Government agency, such as Government National Mortgage Association.

MTGE 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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