Ladder Capital (NYSE: LADR) and Dynex Capital (NYSE:DX) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.

Analyst Recommendations

This is a summary of current ratings and price targets for Ladder Capital and Dynex Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ladder Capital 0 1 4 0 2.80
Dynex Capital 0 2 1 0 2.33

Ladder Capital currently has a consensus price target of $16.25, indicating a potential upside of 19.75%. Dynex Capital has a consensus price target of $7.38, indicating a potential upside of 3.00%. Given Ladder Capital’s stronger consensus rating and higher probable upside, research analysts plainly believe Ladder Capital is more favorable than Dynex Capital.

Risk & Volatility

Ladder Capital has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, Dynex Capital has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Valuation & Earnings

This table compares Ladder Capital and Dynex Capital’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ladder Capital $399.68 million 3.76 $66.72 million $1.22 11.12
Dynex Capital $91.90 million 4.15 $43.09 million $1.44 4.97

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

Profitability

This table compares Ladder Capital and Dynex Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ladder Capital 27.38% 9.78% 2.40%
Dynex Capital 86.86% 11.08% 1.27%

Dividends

Ladder Capital pays an annual dividend of $1.20 per share and has a dividend yield of 8.8%. Dynex Capital pays an annual dividend of $0.72 per share and has a dividend yield of 10.1%. Ladder Capital pays out 98.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Dynex Capital pays out 50.0% of its earnings in the form of a dividend. Dynex Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

46.3% of Ladder Capital shares are held by institutional investors. Comparatively, 44.7% of Dynex Capital shares are held by institutional investors. 12.5% of Ladder Capital shares are held by company insiders. Comparatively, 7.1% of Dynex Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Ladder Capital beats Dynex Capital on 10 of the 16 factors compared between the two stocks.

Ladder Capital Company Profile

Ladder Capital Corp is a commercial real estate finance company. The Company’s segments include loans, securities, real estate and corporate/other. The loans segment includes mortgage loan receivables held for investment (balance sheet loans) and mortgage loan receivables held for sale (conduit loans). The securities segment consists of all of its activities related to commercial real estate securities, which include investments in commercial mortgage-backed securities (CMBS) and United States Agency Securities. The real estate segment includes net leased properties, office buildings, a warehouse and condominium units. The Corporate/other segment includes the Company’s investments in joint ventures, other asset management activities and operating expenses. The Company invests primarily in loans, securities and other interests in the United States commercial real estate, with a focus on senior secured assets.

Dynex Capital Company Profile

Dynex Capital, Inc. is an internally managed mortgage real estate investment trust, which invests in residential and commercial mortgage securities on a leveraged basis. The Company’s objective is to provide attractive risk-adjusted returns to its shareholders over the long term that is reflective of a leveraged fixed income portfolio with a focus on capital preservation. It seeks to provide returns to its shareholders through regular quarterly dividends and through capital appreciation. It invests in Agency and non-Agency mortgage-backed securities (MBS). MBS consists of residential MBS (RMBS), commercial MBS (CMBS) and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the United States Government or a government-sponsored entity (GSE), such as Fannie Mae and Freddie Mac.

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