Capital Trust (BXMT) and Hatteras Financial Corp. (HTS) Critical Comparison

Capital Trust (NYSE: BXMT) and Hatteras Financial Corp. (NYSE:HTS) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, dividends, risk, profitability, analyst recommendations, earnings and institutional ownership.

Profitability

This table compares Capital Trust and Hatteras Financial Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capital Trust 53.85% 8.63% 2.32%
Hatteras Financial Corp. N/A -16.93% -1.89%

Earnings and Valuation

This table compares Capital Trust and Hatteras Financial Corp.’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Capital Trust $298.97 million 10.14 $213.36 million $2.25 14.21
Hatteras Financial Corp. N/A N/A N/A $0.31 52.55

Capital Trust has higher revenue and earnings than Hatteras Financial Corp.. Capital Trust is trading at a lower price-to-earnings ratio than Hatteras Financial Corp., indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

61.4% of Capital Trust shares are held by institutional investors. 0.9% of Capital Trust shares are held 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.

Risk & Volatility

Capital Trust has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Hatteras Financial Corp. has a beta of 0.3, indicating that its stock price is 70% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for Capital Trust and Hatteras Financial Corp., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capital Trust 0 3 3 0 2.50
Hatteras Financial Corp. 0 0 0 0 N/A

Capital Trust presently has a consensus target price of $33.33, suggesting a potential upside of 4.23%. Given Capital Trust’s higher probable upside, equities analysts clearly believe Capital Trust is more favorable than Hatteras Financial Corp..

Dividends

Capital Trust pays an annual dividend of $2.48 per share and has a dividend yield of 7.8%. Hatteras Financial Corp. pays an annual dividend of $1.80 per share and has a dividend yield of 11.0%. Capital Trust pays out 110.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hatteras Financial Corp. pays out 580.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Capital Trust has increased its dividend for 3 consecutive years.

Summary

Capital Trust beats Hatteras Financial Corp. on 12 of the 13 factors compared between the two stocks.

About Capital Trust

Blackstone Mortgage Trust, Inc. is a holding company. The Company conducts its operations as a real estate investment trust for the United States federal income tax purposes. The Company originates and purchases senior loans collateralized by properties in North America and Europe. The Company’s business is focused on originating or acquiring senior, floating rate mortgage loans that are secured by a first priority mortgage on commercial real estate assets primarily in the office, lodging, retail, residential and industrial sectors. These investments may be in the form of whole loans or may also include pari passu participations within mortgage loans. It directly originates, co-originates and acquires debt instruments in conjunction with acquisitions, refinancings and recapitalizations of commercial real estate. The Company’s manager is BXMT Advisors L.L.C.

About Hatteras Financial Corp.

Hatteras Financial Corp. is an externally managed mortgage real estate investment trust (REIT) that invests in single-family residential mortgage real estate assets, such as mortgage-backed security (MBS), mortgage servicing right (MSR), residential mortgage loans and other financial assets. MBS are pass-through securities consisting of a pool of mortgage loans. Its primary business is owning and managing agency securities, with a primary focus on adjustable-rate mortgage securities. Its primary investment assets include Agency MBS; other agency issued securities, such as credit-risk transfer bonds; MSR; non-agency securities; residential mortgage loans, and other real estate related assets as permitted by its investment guidelines and REIT requirements. Its business operations consist of the Hatteras Financial Corp., Onslow Bay Financial LLC, First Winston Securities, Inc. and Wind River TRS LLC. It is externally managed and advised by its manager, Atlantic Capital Advisors LLC.

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