Critical Comparison: MTGE Investment Corp. (MTGE) and Capital Trust (BXMT)

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

Profitability

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

Net Margins Return on Equity Return on Assets
MTGE Investment Corp. 104.38% 10.40% 1.77%
Capital Trust 53.85% 8.63% 2.32%

Volatility & Risk

MTGE Investment Corp. has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500. Comparatively, Capital Trust has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500.

Insider & Institutional Ownership

73.7% of MTGE Investment Corp. shares are owned by institutional investors. Comparatively, 61.4% of Capital Trust shares are owned by institutional investors. 1.1% of MTGE Investment Corp. shares are owned by insiders. Comparatively, 0.9% of Capital Trust shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for MTGE Investment Corp. and Capital Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MTGE Investment Corp. 0 1 3 0 2.75
Capital Trust 0 3 3 0 2.50

MTGE Investment Corp. currently has a consensus target price of $20.00, suggesting a potential upside of 10.50%. Capital Trust has a consensus target price of $33.33, suggesting a potential upside of 4.72%. Given MTGE Investment Corp.’s stronger consensus rating and higher possible upside, analysts plainly believe MTGE Investment Corp. is more favorable than Capital Trust.

Valuation & Earnings

This table compares MTGE Investment Corp. and Capital Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MTGE Investment Corp. $158.84 million 5.22 $101.67 million $2.22 8.15
Capital Trust $298.97 million 10.10 $213.36 million $2.25 14.15

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

Dividends

MTGE Investment Corp. pays an annual dividend of $1.80 per share and has a dividend yield of 9.9%. Capital Trust pays an annual dividend of $2.48 per share and has a dividend yield of 7.8%. MTGE Investment Corp. pays out 81.1% 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 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. MTGE Investment Corp. has increased its dividend for 3 consecutive years. MTGE Investment Corp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

MTGE Investment Corp. beats Capital Trust on 9 of the 16 factors compared between the two stocks.

MTGE Investment Corp. Company Profile

MTGE Investment Corp., formerly American Capital Mortgage Investment Corp., is a real estate investment trust. The Company invests in, finances and manages a leveraged portfolio of real estate-related investments, which include agency residential mortgage-backed securities (RMBS), non-agency securities, other mortgage-related investments and other real estate investments. Agency RMBS includes residential mortgage pass-through certificates and collateralized mortgage obligations (CMOs) structured from residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a government-sponsored enterprise (GSE), or by a United States Government agency, such as Government National Mortgage Association (Ginnie Mae). Non-agency securities include securities backed by residential mortgages that are not guaranteed by a GSE or the United States Government agency, and credit risk transfer securities (CRT). The Company’s manager is MTGE Management, LLC.

Capital Trust Company Profile

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.

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