Critical Analysis: Five Oaks Investment Corp. (OAKS) versus Capstead Mortgage Corporation (CMO)

Five Oaks Investment Corp. (NYSE: OAKS) and Capstead Mortgage Corporation (NYSE:CMO) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitability, institutional ownership and valuation.

Insider & Institutional Ownership

33.7% of Five Oaks Investment Corp. shares are owned by institutional investors. Comparatively, 72.6% of Capstead Mortgage Corporation shares are owned by institutional investors. 0.9% of Five Oaks Investment Corp. shares are owned by insiders. Comparatively, 1.7% of Capstead Mortgage Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Five Oaks Investment Corp. has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500. Comparatively, Capstead Mortgage Corporation has a beta of 0.36, suggesting that its share price is 64% less volatile than the S&P 500.

Dividends

Five Oaks Investment Corp. pays an annual dividend of $0.60 per share and has a dividend yield of 14.2%. Capstead Mortgage Corporation pays an annual dividend of $0.84 per share and has a dividend yield of 8.8%. Five Oaks Investment Corp. pays out 89.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Capstead Mortgage Corporation pays out 137.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Five Oaks Investment Corp. has increased its dividend for 3 consecutive years. Five Oaks Investment Corp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Five Oaks Investment Corp. and Capstead Mortgage Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Five Oaks Investment Corp. 0 1 0 0 2.00
Capstead Mortgage Corporation 0 2 0 0 2.00

Capstead Mortgage Corporation has a consensus price target of $11.00, suggesting a potential upside of 14.82%. Given Capstead Mortgage Corporation’s higher possible upside, analysts plainly believe Capstead Mortgage Corporation is more favorable than Five Oaks Investment Corp..

Valuation & Earnings

This table compares Five Oaks Investment Corp. and Capstead Mortgage Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Five Oaks Investment Corp. $26.49 million 3.54 $14.83 million $0.67 6.33
Capstead Mortgage Corporation $88.27 million 10.43 $58.62 million $0.61 15.70

Capstead Mortgage Corporation has higher revenue and earnings than Five Oaks Investment Corp.. Five Oaks Investment Corp. is trading at a lower price-to-earnings ratio than Capstead Mortgage Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Five Oaks Investment Corp. and Capstead Mortgage Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Five Oaks Investment Corp. 12.65% 10.48% 0.48%
Capstead Mortgage Corporation 35.05% 7.31% 0.56%

Summary

Capstead Mortgage Corporation beats Five Oaks Investment Corp. on 9 of the 15 factors compared between the two stocks.

Five Oaks Investment Corp. Company Profile

Five Oaks Investment Corp. is a real estate investment trust. The Company is focused on investing on a leveraged basis in mortgage and other real estate-related assets, particularly residential mortgage loans and mortgage-backed securities (MBS). The Company invests in various assets, such as Agency residential MBS (RMBS); securitizations backed by multi-family mortgage loans, or Multi-Family MBS; residential mortgage loans and other mortgage-related investments, including mortgage servicing rights (MSRs), and Non-Agency RMBS. The Company finances its investments in Agency RMBS, Multi-Family MBS, residential mortgage loans and Non-Agency RMBS primarily through short-term borrowings structured as repurchase agreements. The Company is externally managed and advised by Oak Circle Capital Partners LLC.

Capstead Mortgage Corporation Company Profile

Capstead Mortgage Corporation operates as a self-managed real estate investment trust (REIT). The Company manages a leveraged portfolio of residential mortgage pass-through securities consisting of relatively short-duration adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac), or by an agency of the federal government, the Government National Mortgage Association (Ginnie Mae). The Company finances its residential mortgage investments by leveraging its long-term investment capital with secured borrowings consisting primarily of borrowings under repurchase arrangements with commercial banks and other financial institutions. The Company’s portfolio of residential mortgage investments includes residential mortgage investments.

Receive News & Ratings for Five Oaks Investment Corp. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Five Oaks Investment Corp. and related companies with MarketBeat.com's FREE daily email newsletter.

Latest News

Leave a Reply