Critical Analysis: Chimera Investment Corporation (CIM) vs. Apollo Residential Mortgage (AMTG)

Chimera Investment Corporation (NYSE: CIM) and Apollo Residential Mortgage (NYSE:AMTG) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, risk, valuation and dividends.

Profitability

This table compares Chimera Investment Corporation and Apollo Residential Mortgage’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chimera Investment Corporation 63.94% 14.27% 2.52%
Apollo Residential Mortgage 56.35% 10.11% 2.60%

Analyst Ratings

This is a summary of current recommendations and price targets for Chimera Investment Corporation and Apollo Residential Mortgage, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chimera Investment Corporation 0 4 0 0 2.00
Apollo Residential Mortgage 0 0 0 0 N/A

Chimera Investment Corporation presently has a consensus price target of $18.83, indicating a potential upside of 2.58%.

Risk and Volatility

Chimera Investment Corporation has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, Apollo Residential Mortgage has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Insider and Institutional Ownership

51.2% of Chimera Investment Corporation shares are held by institutional investors. 0.7% of Chimera Investment Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Chimera Investment Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 10.9%. Apollo Residential Mortgage does not pay a dividend. Chimera Investment Corporation pays out 57.3% of its earnings in the form of a dividend. Chimera Investment Corporation has raised its dividend for 2 consecutive years and Apollo Residential Mortgage has raised its dividend for 2 consecutive years.

Valuation & Earnings

This table compares Chimera Investment Corporation and Apollo Residential Mortgage’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Chimera Investment Corporation $934.07 3.69 $551.94 $3.49 5.26
Apollo Residential Mortgage N/A N/A N/A ($0.93) N/A

Chimera Investment Corporation has higher revenue and earnings than Apollo Residential Mortgage. Apollo Residential Mortgage is trading at a lower price-to-earnings ratio than Chimera Investment Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Chimera Investment Corporation beats Apollo Residential Mortgage on 8 of the 10 factors compared between the two stocks.

Chimera Investment Corporation Company Profile

Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.

Apollo Residential Mortgage Company Profile

Apollo Residential Mortgage, Inc. is a holding company that conducts its business primarily through ARM Operating, LLC and other operating subsidiaries. The Company is primarily engaged in the business of investing in residential mortgage assets in the United States. The Company seeks to generate risk-adjusted returns from its assets to its stockholders over the long term, primarily through dividend distributions and secondarily through capital appreciation. The Company’s portfolio consists of agency residential mortgage-backed securities (RMBS), non-Agency RMBS; securitized mortgage loans, and other mortgage and mortgage related investment securities and other mortgage related investments. The Company may invest in a range of other residential mortgage and mortgage-related assets. The Company is externally managed and advised by ARM Manager, LLC, an indirect subsidiary of Apollo Global Management, LLC.

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