Cherry Hill Mortgage Investment (NYSE:CHMI – Get Free Report) and Two Harbors Investments (NYSE:TWO – Get Free Report) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.
Dividends
Cherry Hill Mortgage Investment pays an annual dividend of $0.40 per share and has a dividend yield of 16.4%. Two Harbors Investments pays an annual dividend of $1.36 per share and has a dividend yield of 10.9%. Cherry Hill Mortgage Investment pays out 363.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Two Harbors Investments pays out -35.6% of its earnings in the form of a dividend. Cherry Hill Mortgage Investment has increased its dividend for 1 consecutive years and Two Harbors Investments has increased its dividend for 1 consecutive years.
Valuation and Earnings
This table compares Cherry Hill Mortgage Investment and Two Harbors Investments”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Cherry Hill Mortgage Investment | $61.10 million | 1.47 | $6.83 million | $0.11 | 22.23 |
| Two Harbors Investments | $412.00 million | 3.19 | -$454.30 million | ($3.82) | -3.28 |
Cherry Hill Mortgage Investment has higher earnings, but lower revenue than Two Harbors Investments. Two Harbors Investments is trading at a lower price-to-earnings ratio than Cherry Hill Mortgage Investment, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Cherry Hill Mortgage Investment and Two Harbors Investments’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Cherry Hill Mortgage Investment | 18.88% | 17.95% | 1.52% |
| Two Harbors Investments | -87.72% | 13.62% | 1.44% |
Analyst Recommendations
This is a breakdown of recent recommendations and price targets for Cherry Hill Mortgage Investment and Two Harbors Investments, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Cherry Hill Mortgage Investment | 1 | 1 | 2 | 0 | 2.25 |
| Two Harbors Investments | 2 | 6 | 0 | 0 | 1.75 |
Cherry Hill Mortgage Investment currently has a consensus target price of $3.00, indicating a potential upside of 22.70%. Two Harbors Investments has a consensus target price of $12.25, indicating a potential downside of 2.20%. Given Cherry Hill Mortgage Investment’s stronger consensus rating and higher probable upside, analysts clearly believe Cherry Hill Mortgage Investment is more favorable than Two Harbors Investments.
Insider & Institutional Ownership
18.5% of Cherry Hill Mortgage Investment shares are owned by institutional investors. Comparatively, 64.2% of Two Harbors Investments shares are owned by institutional investors. 1.5% of Cherry Hill Mortgage Investment shares are owned by insiders. Comparatively, 0.6% of Two Harbors Investments shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Volatility and Risk
Cherry Hill Mortgage Investment has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500. Comparatively, Two Harbors Investments has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500.
Summary
Cherry Hill Mortgage Investment beats Two Harbors Investments on 11 of the 16 factors compared between the two stocks.
About Cherry Hill Mortgage Investment
Cherry Hill Mortgage Investment Corporation, a residential real estate finance company, acquires, invests in, and manages residential mortgage assets in the United States. It operates through Investments in RMBS (residential mortgage-backed securities) and Investments in Servicing Related Assets segments. Cherry Hill Mortgage Investment Corporation qualifies as a real estate investment trust for federal income tax purposes. The company generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Cherry Hill Mortgage Investment Corporation was incorporated in 2012 and is based in Farmingdale, New Jersey.
About Two Harbors Investments
Two Harbors Investment Corp. invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through RoundPoint in the United States. The company target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, hybrid mortgage loans, or derivatives; and other assets, such as financial and mortgage-related assets, including non-agency securities and non-hedging transactions. It qualifies as a REIT for federal income tax purposes. As a REIT, the company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in St. Louis Park, Minnesota.
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