Contrasting CYS Investments (CYS) and New Residential Investment (NRZ)

CYS Investments (NYSE: CYS) and New Residential Investment (NYSE:NRZ) are both financials companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, risk, valuation and dividends.

Profitability

This table compares CYS Investments and New Residential Investment’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%
New Residential Investment 60.06% 19.38% 3.99%

Analyst Ratings

This is a summary of current recommendations and price targets for CYS Investments and New Residential Investment, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CYS Investments 0 4 0 0 2.00
New Residential Investment 0 0 6 0 3.00

CYS Investments presently has a consensus price target of $8.25, indicating a potential upside of 29.51%. New Residential Investment has a consensus price target of $18.92, indicating a potential upside of 16.05%. Given CYS Investments’ higher possible upside, analysts plainly believe CYS Investments is more favorable than New Residential Investment.

Risk and Volatility

CYS Investments has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500. Comparatively, New Residential Investment has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500.

Insider and Institutional Ownership

62.2% of CYS Investments shares are held by institutional investors. Comparatively, 45.1% of New Residential Investment shares are held by institutional investors. 1.0% of CYS Investments shares are held by insiders. Comparatively, 4.0% of New Residential Investment shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

CYS Investments pays an annual dividend of $1.00 per share and has a dividend yield of 15.7%. New Residential Investment pays an annual dividend of $2.00 per share and has a dividend yield of 12.3%. CYS Investments pays out -500.0% of its earnings in the form of a dividend. New Residential Investment pays out 64.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. CYS Investments has raised its dividend for 4 consecutive years. CYS Investments is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares CYS Investments and New Residential Investment’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CYS Investments $294.54 million 3.35 $16.39 million ($0.20) -31.85
New Residential Investment $1.08 billion 5.09 $504.45 million $3.09 5.28

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

Summary

New Residential Investment beats CYS Investments on 12 of the 17 factors compared between the two stocks.

About CYS Investments

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.

About New Residential Investment

New Residential Investment Corp. is a real estate investment trust (REIT). The Company focuses on investing in, and managing, investments related to residential real estate. The Company’s segments include investments in excess mortgage servicing rights (Excess MSRs); investments in mortgage servicing rights (MSRs); investments in servicer advances; investments in real estate securities; investments in residential mortgage loans; investments in consumer loans, and corporate. Its portfolio includes mortgage servicing related assets, residential mortgage backed securities (RMBS), residential mortgage loans and other investments. The Company’s servicing related assets include its investments in Excess MSRs, MSRs and servicer advances. The Company invests in agency RMBS and non-agency RMBS. The Company’s other investments consist of consumer loans.

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