PennyMac Mortgage Investment Trust (NYSE:PMT) and RAIT Financial Trust (OTCMKTS:RASF) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, profitability, risk, institutional ownership, dividends, valuation and earnings.
Earnings & Valuation
This table compares PennyMac Mortgage Investment Trust and RAIT Financial Trust’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|PennyMac Mortgage Investment Trust||$351.07 million||4.01||$152.80 million||$1.99||10.42|
|RAIT Financial Trust||$99.71 million||0.03||-$151.87 million||N/A||N/A|
PennyMac Mortgage Investment Trust has higher revenue and earnings than RAIT Financial Trust.
Volatility & Risk
PennyMac Mortgage Investment Trust has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500. Comparatively, RAIT Financial Trust has a beta of 5.84, indicating that its share price is 484% more volatile than the S&P 500.
Institutional & Insider Ownership
72.2% of PennyMac Mortgage Investment Trust shares are held by institutional investors. Comparatively, 0.1% of RAIT Financial Trust shares are held by institutional investors. 2.5% of PennyMac Mortgage Investment Trust shares are held by insiders. Comparatively, 1.9% of RAIT Financial Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This is a breakdown of current ratings and price targets for PennyMac Mortgage Investment Trust and RAIT Financial Trust, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|PennyMac Mortgage Investment Trust||0||2||3||0||2.60|
|RAIT Financial Trust||0||0||0||0||N/A|
PennyMac Mortgage Investment Trust presently has a consensus target price of $21.40, suggesting a potential upside of 3.23%. Given PennyMac Mortgage Investment Trust’s higher probable upside, equities analysts clearly believe PennyMac Mortgage Investment Trust is more favorable than RAIT Financial Trust.
PennyMac Mortgage Investment Trust pays an annual dividend of $1.88 per share and has a dividend yield of 9.1%. RAIT Financial Trust does not pay a dividend. PennyMac Mortgage Investment Trust pays out 94.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This table compares PennyMac Mortgage Investment Trust and RAIT Financial Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|PennyMac Mortgage Investment Trust||43.52%||12.19%||2.22%|
|RAIT Financial Trust||-144.12%||-74.38%||-7.03%|
PennyMac Mortgage Investment Trust beats RAIT Financial Trust on 11 of the 13 factors compared between the two stocks.
About PennyMac Mortgage Investment Trust
PennyMac Mortgage Investment Trust, a specialty finance company, invests primarily in residential mortgage loans and mortgage-related assets in the United States. The company's Correspondent Production segment engages in purchasing, pooling, and reselling newly originated prime credit mortgage loans directly or in the form of mortgage-backed securities (MBS). Its Credit Sensitive Strategies segment invests in credit risk transfer agreements, distressed mortgage loans, real estate acquired in settlement of mortgage loans, non-Agency subordinated bonds, and small balance commercial real estate mortgage loans. The company's Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency MBS; and the related interest rate hedging activities. PNMAC Capital Management, LLC acts as the manager of PennyMac Mortgage Investment Trust. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. PennyMac Mortgage Investment Trust was founded in 2009 and is based in Westlake Village, California.
About RAIT Financial Trust
RAIT Financial Trust is an internally-managed real estate investment trust focused on providing debt financing options to owners of commercial real estate throughout the United States.
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