Comparing Granite Point Mortgage Trust (NYSE:GPMT) & ARMOUR Residential REIT (NYSE:ARR)

Granite Point Mortgage Trust (NYSE:GPMT) and ARMOUR Residential REIT (NYSE:ARR) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, dividends, institutional ownership, profitability, valuation and analyst recommendations.

Analyst Ratings

This is a summary of recent ratings and price targets for Granite Point Mortgage Trust and ARMOUR Residential REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Granite Point Mortgage Trust	1	2	1	0	2.00
ARMOUR Residential REIT	1	6	1	0	2.00

Granite Point Mortgage Trust currently has a consensus price target of $3.08, indicating a potential upside of 13.57%. ARMOUR Residential REIT has a consensus price target of $16.00, indicating a potential upside of 1.94%. Given Granite Point Mortgage Trust’s higher probable upside, equities research analysts plainly believe Granite Point Mortgage Trust is more favorable than ARMOUR Residential REIT.

Profitability

This table compares Granite Point Mortgage Trust and ARMOUR Residential REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Granite Point Mortgage Trust	-59.38%	-26.91%	-7.96%
ARMOUR Residential REIT	-4.55%	15.89%	1.64%

Dividends

Granite Point Mortgage Trust pays an annual dividend of $0.20 per share and has a dividend yield of 7.4%. ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 18.3%. Granite Point Mortgage Trust pays out -9.4% of its earnings in the form of a dividend. ARMOUR Residential REIT pays out -1,200.0% 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. ARMOUR Residential REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Granite Point Mortgage Trust 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
Granite Point Mortgage Trust	$41.11 million	3.13	-$207.05 million	($2.12)	-1.28
ARMOUR Residential REIT	$550.95 million	2.61	-$14.39 million	($0.24)	-65.40

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

Insider and Institutional Ownership

51.6% of Granite Point Mortgage Trust shares are owned by institutional investors. Comparatively, 54.2% of ARMOUR Residential REIT shares are owned by institutional investors. 3.1% of Granite Point Mortgage Trust shares are owned by insiders. Comparatively, 0.2% of ARMOUR Residential REIT shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Granite Point Mortgage Trust has a beta of 1.89, meaning that its share price is 89% more volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.

Summary

ARMOUR Residential REIT beats Granite Point Mortgage Trust on 9 of the 14 factors compared between the two stocks.

About Granite Point Mortgage Trust

Granite Point Mortgage Trust Inc., a real estate investment trust, originates, invests in, and manages senior floating-rate commercial mortgage loans, and other debt and debt-like commercial real estate investments in the United States. The company provides intermediate-term bridge or transitional financing for various purposes, including acquisitions, recapitalizations, and refinancing, as well as a range of business plans, including lease-up, renovation, repositioning, and repurposing of the commercial property. 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 stockholders. The company was founded in 2015 and is headquartered in New York, New York.

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.