Analyzing Ventas (NYSE:VTR) and ARMOUR Residential REIT (NYSE:ARR)

Ventas (NYSE:VTR) and ARMOUR Residential REIT (NYSE:ARR) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Profitability

This table compares Ventas and ARMOUR Residential REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ventas	1.65%	0.82%	0.32%
ARMOUR Residential REIT	-2.61%	16.00%	1.65%

Valuation and Earnings

This table compares Ventas and ARMOUR Residential REIT”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ventas	$5.08 billion	5.70	$81.15 million	$0.33	194.38
ARMOUR Residential REIT	$4.08 million	327.46	-$14.39 million	($0.35)	-46.67

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

Institutional and Insider Ownership

94.2% of Ventas shares are held by institutional investors. Comparatively, 54.2% of ARMOUR Residential REIT shares are held by institutional investors. 0.8% of Ventas shares are held by insiders. Comparatively, 0.4% of ARMOUR Residential REIT shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Ventas pays an annual dividend of $1.92 per share and has a dividend yield of 3.0%. ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 17.6%. Ventas pays out 581.8% 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 -822.9% of its earnings in the form of a dividend. Ventas has increased its dividend for 1 consecutive years. ARMOUR Residential REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent recommendations for Ventas and ARMOUR Residential REIT, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ventas	0	3	7	2	2.92
ARMOUR Residential REIT	0	4	1	0	2.20

Ventas presently has a consensus target price of $73.00, suggesting a potential upside of 13.80%. ARMOUR Residential REIT has a consensus target price of $20.50, suggesting a potential upside of 25.50%. Given ARMOUR Residential REIT’s higher probable upside, analysts clearly believe ARMOUR Residential REIT is more favorable than Ventas.

Volatility and Risk

Ventas has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 1.36, indicating that its stock price is 36% more volatile than the S&P 500.

Summary

Ventas beats ARMOUR Residential REIT on 11 of the 18 factors compared between the two stocks.

About Ventas

Ventas Inc. (NYSE: VTR) is a leading S&P 500 real estate investment trust focused on delivering strong, sustainable shareholder returns by enabling exceptional environments that benefit a large and growing aging population. The Company's growth is fueled by its senior housing communities, which provide valuable services to residents and enable them to thrive in supported environments. Ventas leverages its unmatched operational expertise, data-driven insights from its Ventas Operational InsightsTM platform, extensive relationships and strong financial position to achieve its goal of delivering outsized performance across approximately 1,400 properties. The Ventas portfolio is composed of senior housing communities, outpatient medical buildings, research centers and healthcare facilities in North America and the United Kingdom. The Company benefits from a seasoned team of talented professionals who share a commitment to excellence, integrity and a common purpose of helping people live longer, healthier, happier lives.

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.