Cherry Hill Mortgage Investment (NYSE:CHMI) & ARMOUR Residential REIT (NYSE:ARR) Head-To-Head Review

Cherry Hill Mortgage Investment (NYSE:CHMI) and ARMOUR Residential REIT (NYSE:ARR) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares Cherry Hill Mortgage Investment and ARMOUR Residential REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cherry Hill Mortgage Investment	18.88%	17.95%	1.52%
ARMOUR Residential REIT	27.43%	15.39%	1.65%

Dividends

Cherry Hill Mortgage Investment pays an annual dividend of $0.40 per share and has a dividend yield of 17.0%. ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 16.8%. Cherry Hill Mortgage Investment pays out 363.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ARMOUR Residential REIT pays out 150.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cherry Hill Mortgage Investment has increased its dividend for 1 consecutive years. Cherry Hill Mortgage Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Cherry Hill Mortgage Investment and ARMOUR Residential REIT”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cherry Hill Mortgage Investment	$61.10 million	1.42	$6.83 million	$0.11	21.41
ARMOUR Residential REIT	$800.42 million	2.65	$322.69 million	$1.92	8.91

ARMOUR Residential REIT has higher revenue and earnings than Cherry Hill Mortgage Investment. ARMOUR Residential REIT is trading at a lower price-to-earnings ratio than Cherry Hill Mortgage Investment, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Cherry Hill Mortgage Investment has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Cherry Hill Mortgage Investment and ARMOUR Residential REIT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cherry Hill Mortgage Investment	1	1	2	0	2.25
ARMOUR Residential REIT	1	2	2	0	2.20

Cherry Hill Mortgage Investment presently has a consensus target price of $3.00, indicating a potential upside of 27.39%. ARMOUR Residential REIT has a consensus target price of $18.50, indicating a potential upside of 8.16%. Given Cherry Hill Mortgage Investment’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Cherry Hill Mortgage Investment is more favorable than ARMOUR Residential REIT.

Institutional and Insider Ownership

18.5% of Cherry Hill Mortgage Investment shares are held by institutional investors. Comparatively, 54.2% of ARMOUR Residential REIT shares are held by institutional investors. 1.5% of Cherry Hill Mortgage Investment shares are held by insiders. Comparatively, 0.2% of ARMOUR Residential REIT shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

ARMOUR Residential REIT beats Cherry Hill Mortgage Investment on 9 of the 16 factors compared between the two stocks.

About Cherry Hill Mortgage Investment

Cherry Hill Mortgage Investment Corporation, a residential real estate finance company, acquires, invests in, and manages residential mortgage assets in the United States. It operates through Investments in RMBS (residential mortgage-backed securities) and Investments in Servicing Related Assets segments. Cherry Hill Mortgage Investment Corporation qualifies as a real estate investment trust for federal income tax purposes. The company generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Cherry Hill Mortgage Investment Corporation was incorporated in 2012 and is based in Farmingdale, New Jersey.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. Its securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans; and unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.