Annaly Capital Management (NYSE: NLY) and New Residential Investment Corp. (NYSE:NRZ) are both mid-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitabiliy, dividends, institutional ownership, valuation, earnings and analyst recommendations.
This is a breakdown of recent ratings and price targets for Annaly Capital Management and New Residential Investment Corp., as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Annaly Capital Management||1||4||2||0||2.14|
|New Residential Investment Corp.||0||2||6||0||2.75|
Annaly Capital Management presently has a consensus target price of $11.21, indicating a potential downside of 7.37%. New Residential Investment Corp. has a consensus target price of $16.57, indicating a potential downside of 1.07%. Given New Residential Investment Corp.’s stronger consensus rating and higher possible upside, analysts clearly believe New Residential Investment Corp. is more favorable than Annaly Capital Management.
This table compares Annaly Capital Management and New Residential Investment Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Annaly Capital Management||121.84%||11.27%||1.52%|
|New Residential Investment Corp.||55.85%||19.02%||3.80%|
Insider & Institutional Ownership
52.6% of Annaly Capital Management shares are held by institutional investors. Comparatively, 54.9% of New Residential Investment Corp. shares are held by institutional investors. 0.4% of Annaly Capital Management shares are held by insiders. Comparatively, 4.0% of New Residential Investment Corp. shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares Annaly Capital Management and New Residential Investment Corp.’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Annaly Capital Management||$3.30 billion||3.99||$3.14 billion||$2.89||4.19|
|New Residential Investment Corp.||$1.30 billion||3.96||$851.39 million||$2.77||6.05|
Annaly Capital Management has higher revenue and earnings than New Residential Investment Corp.. Annaly Capital Management is trading at a lower price-to-earnings ratio than New Residential Investment Corp., indicating that it is currently the more affordable of the two stocks.
Annaly Capital Management pays an annual dividend of $1.20 per share and has a dividend yield of 9.9%. New Residential Investment Corp. pays an annual dividend of $2.00 per share and has a dividend yield of 11.9%. Annaly Capital Management pays out 41.5% of its earnings in the form of a dividend. New Residential Investment Corp. pays out 72.2% 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. New Residential Investment Corp. has raised its dividend for 3 consecutive years. New Residential Investment Corp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Annaly Capital Management has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500. Comparatively, New Residential Investment Corp. has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.
New Residential Investment Corp. beats Annaly Capital Management on 10 of the 17 factors compared between the two stocks.
About Annaly Capital Management
Annaly Capital Management, Inc. is a mortgage real estate investment trust (REIT). The Company owns a portfolio of real estate related investments. Its investment groups primarily consist of Agency, which invests primarily in various types of Agency mortgage-backed securities and related derivatives to hedge these investments; Residential credit, which invests primarily in non-Agency mortgage-backed assets within securitized products and residential mortgage loan markets; Commercial real estate, which originates and invests in commercial mortgage loans, securities, and other commercial real estate investments, and Middle market, which provides customized debt financing to middle-market businesses. Its business operations consist of Annaly Commercial Real Estate Group, Inc., which is its subsidiary that specializes in originating or acquiring, financing and managing commercial loans and other commercial real estate debt; Annaly Middle Market Lending LLC, and RCap Securities, Inc.
About New Residential Investment Corp.
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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