PennyMac Mortgage Investment Trust (NYSE:PMT – Get Free Report) and Apollo Commercial Real Estate Finance (NYSE:ARI – Get Free Report) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.
Valuation and Earnings
This table compares PennyMac Mortgage Investment Trust and Apollo Commercial Real Estate Finance”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| PennyMac Mortgage Investment Trust | $144.62 million | 7.42 | $160.98 million | $0.72 | 17.12 |
| Apollo Commercial Real Estate Finance | $303.67 million | 4.85 | -$119.64 million | ($0.14) | -75.68 |
Institutional and Insider Ownership
67.4% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. Comparatively, 54.4% of Apollo Commercial Real Estate Finance shares are owned by institutional investors. 0.9% of PennyMac Mortgage Investment Trust shares are owned by company insiders. Comparatively, 0.7% of Apollo Commercial Real Estate Finance shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Analyst Ratings
This is a summary of current recommendations and price targets for PennyMac Mortgage Investment Trust and Apollo Commercial Real Estate Finance, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| PennyMac Mortgage Investment Trust | 0 | 5 | 1 | 0 | 2.17 |
| Apollo Commercial Real Estate Finance | 0 | 3 | 2 | 0 | 2.40 |
PennyMac Mortgage Investment Trust presently has a consensus target price of $14.00, suggesting a potential upside of 13.58%. Apollo Commercial Real Estate Finance has a consensus target price of $10.31, suggesting a potential downside of 2.67%. Given PennyMac Mortgage Investment Trust’s higher probable upside, analysts plainly believe PennyMac Mortgage Investment Trust is more favorable than Apollo Commercial Real Estate Finance.
Profitability
This table compares PennyMac Mortgage Investment Trust and Apollo Commercial Real Estate Finance’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| PennyMac Mortgage Investment Trust | 34.65% | 7.68% | 0.71% |
| Apollo Commercial Real Estate Finance | -1.49% | 8.42% | 1.74% |
Dividends
PennyMac Mortgage Investment Trust pays an annual dividend of $1.60 per share and has a dividend yield of 13.0%. Apollo Commercial Real Estate Finance pays an annual dividend of $1.00 per share and has a dividend yield of 9.4%. PennyMac Mortgage Investment Trust pays out 222.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Apollo Commercial Real Estate Finance pays out -714.3% of its earnings in the form of a dividend.
Volatility and Risk
PennyMac Mortgage Investment Trust has a beta of 1.3, indicating that its share price is 30% more volatile than the S&P 500. Comparatively, Apollo Commercial Real Estate Finance has a beta of 1.57, indicating that its share price is 57% more volatile than the S&P 500.
Summary
PennyMac Mortgage Investment Trust beats Apollo Commercial Real Estate Finance on 9 of the 16 factors compared between the two stocks.
About PennyMac Mortgage Investment Trust
PennyMac Mortgage Investment Trust, through its subsidiary, primarily invests in mortgage-related assets in the United States. The company operates through: Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production segments. Its Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, subordinate mortgage-backed securities (MBS), distressed loans, and real estate. 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, as well as related interest rate hedging activities. Its Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. The company primarily sells its loans to government-sponsored entities or PennyMac Loan Services, LLC. 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 shareholders. The company was incorporated in 2009 and is headquartered in Westlake Village, California.
About Apollo Commercial Real Estate Finance
Apollo Commercial Real Estate Finance, Inc. operates as a real estate investment trust (REIT) that originates, acquires, invests in, and manages commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments in the United States, the United Kingdom, and Europe. It is qualified as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income taxes, if the company distributes at least 90% of its REIT taxable income to its stockholders. Apollo Commercial Real Estate Finance, Inc. was incorporated in 2009 and is based in New York, New York.
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