Hatteras Financial (NYSE: HTS) and New York Mortgage Trust (NASDAQ:NYMT) are both small-cap mortgage reits companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, profitability, institutional ownership and earnings.

Profitability

This table compares Hatteras Financial and New York Mortgage Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hatteras Financial N/A -16.93% -1.89%
New York Mortgage Trust 20.23% 10.78% 0.74%

Analyst Ratings

This is a summary of recent recommendations and price targets for Hatteras Financial and New York Mortgage Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hatteras Financial 0 0 0 0 N/A
New York Mortgage Trust 0 4 1 0 2.20

New York Mortgage Trust has a consensus price target of $6.19, indicating a potential upside of 2.95%. Given New York Mortgage Trust’s higher possible upside, analysts clearly believe New York Mortgage Trust is more favorable than Hatteras Financial.

Earnings & Valuation

This table compares Hatteras Financial and New York Mortgage Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hatteras Financial N/A N/A N/A ($0.09) -181.00
New York Mortgage Trust $319.31 million 2.11 $67.55 million $0.50 12.02

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

Dividends

Hatteras Financial pays an annual dividend of $1.80 per share and has a dividend yield of 11.0%. New York Mortgage Trust pays an annual dividend of $0.80 per share and has a dividend yield of 13.3%. Hatteras Financial pays out -2,000.0% of its earnings in the form of a dividend. New York Mortgage Trust pays out 160.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider and Institutional Ownership

37.8% of New York Mortgage Trust shares are owned by institutional investors. 1.3% of New York Mortgage Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

New York Mortgage Trust beats Hatteras Financial on 11 of the 12 factors compared between the two stocks.

About Hatteras Financial

Hatteras Financial Corp. is an externally managed mortgage real estate investment trust (REIT) that invests in single-family residential mortgage real estate assets, such as mortgage-backed security (MBS), mortgage servicing right (MSR), residential mortgage loans and other financial assets. MBS are pass-through securities consisting of a pool of mortgage loans. Its primary business is owning and managing agency securities, with a primary focus on adjustable-rate mortgage securities. Its primary investment assets include Agency MBS; other agency issued securities, such as credit-risk transfer bonds; MSR; non-agency securities; residential mortgage loans, and other real estate related assets as permitted by its investment guidelines and REIT requirements. Its business operations consist of the Hatteras Financial Corp., Onslow Bay Financial LLC, First Winston Securities, Inc. and Wind River TRS LLC. It is externally managed and advised by its manager, Atlantic Capital Advisors LLC.

About New York Mortgage Trust

New York Mortgage Trust, Inc. is a real estate investment trust (REIT). The Company is engaged in the business of acquiring, investing in, financing and managing primarily mortgage-related assets and financial assets. The Company’s investment portfolio includes residential mortgage loans, including second mortgages and loans sourced from distressed markets, non-agency residential mortgage-backed securities (RMBS), multi-family commercial mortgage-backed securities, preferred equity and joint venture equity investments in, and mezzanine loans to, owners of multi-family properties, equity and debt securities issued by entities that invest in residential and commercial real estate and agency RMBS. It may acquire and manage various other types of mortgage-related and financial assets, including, without limitation, collateralized mortgage obligations and securities issued by newly originated residential securitizations, including credit sensitive securities from these securitizations.

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