Critical Analysis: Chimera Investment (CIM) and KKR Real Estate Finance Trust (KREF)

Chimera Investment (NYSE: CIM) and KKR Real Estate Finance Trust (NYSE:KREF) are both financials companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, risk, institutional ownership and valuation.

Insider & Institutional Ownership

50.7% of Chimera Investment shares are held by institutional investors. Comparatively, 65.7% of KKR Real Estate Finance Trust shares are held by institutional investors. 0.7% of Chimera Investment shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Chimera Investment and KKR Real Estate Finance Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Chimera Investment $934.07 million 3.61 $551.94 million $3.25 5.53
KKR Real Estate Finance Trust $41.19 million 25.74 $31.15 million N/A N/A

Chimera Investment has higher revenue and earnings than KKR Real Estate Finance Trust.

Dividends

Chimera Investment pays an annual dividend of $2.00 per share and has a dividend yield of 11.1%. KKR Real Estate Finance Trust pays an annual dividend of $1.48 per share and has a dividend yield of 7.5%. Chimera Investment pays out 61.5% of its earnings in the form of a dividend. KKR Real Estate Finance Trust has increased its dividend for 3 consecutive years.

Profitability

This table compares Chimera Investment and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chimera Investment 58.21% 13.29% 2.33%
KKR Real Estate Finance Trust 77.41% 6.08% 0.75%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Chimera Investment and KKR Real Estate Finance Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chimera Investment 0 4 0 0 2.00
KKR Real Estate Finance Trust 0 3 1 0 2.25

Chimera Investment currently has a consensus price target of $18.83, suggesting a potential upside of 4.75%. KKR Real Estate Finance Trust has a consensus price target of $22.50, suggesting a potential upside of 13.92%. Given KKR Real Estate Finance Trust’s stronger consensus rating and higher probable upside, analysts clearly believe KKR Real Estate Finance Trust is more favorable than Chimera Investment.

Summary

KKR Real Estate Finance Trust beats Chimera Investment on 8 of the 14 factors compared between the two stocks.

About Chimera Investment

Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.

About KKR Real Estate Finance Trust

KKR Real Estate Finance Trust Inc is a real estate finance company that focuses primarily on originating and acquiring senior mortgage loans secured by commercial real estate assets (CRE). KKR manages investments across multiple asset classes, including private equity, real estate, energy, infrastructure, credit and hedge funds. The Company’s investment strategy is to originate or acquire senior mortgage loans collateralized by institutional-quality CRE assets. Its target assets also include mezzanine loans, preferred equity and other debt-oriented instruments. The Company’s investment objective is capital preservation and generating attractive risk-adjusted returns for its stockholders over the long term, primarily through dividends.

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