Analyzing Anworth Mortgage Asset (ANH) & The GEO Group (GEO)

Anworth Mortgage Asset (NYSE: ANH) and The GEO Group (NYSE:GEO) are both financials companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, profitability, dividends, institutional ownership, valuation, analyst recommendations and earnings.

Profitability

This table compares Anworth Mortgage Asset and The GEO Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Anworth Mortgage Asset 37.57% 8.84% 0.95%
The GEO Group 7.05% 14.85% 4.17%

Valuation & Earnings

This table compares Anworth Mortgage Asset and The GEO Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Anworth Mortgage Asset $52.04 million 10.48 $22.49 million $0.44 12.64
The GEO Group $2.18 billion 1.34 $148.71 million $1.35 17.46

The GEO Group has higher revenue and earnings than Anworth Mortgage Asset. Anworth Mortgage Asset is trading at a lower price-to-earnings ratio than The GEO Group, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

56.3% of Anworth Mortgage Asset shares are owned by institutional investors. Comparatively, 95.6% of The GEO Group shares are owned by institutional investors. 1.9% of Anworth Mortgage Asset shares are owned by company insiders. Comparatively, 2.4% of The GEO Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Anworth Mortgage Asset pays an annual dividend of $0.60 per share and has a dividend yield of 10.8%. The GEO Group pays an annual dividend of $1.88 per share and has a dividend yield of 8.0%. Anworth Mortgage Asset pays out 136.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. The GEO Group pays out 139.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Anworth Mortgage Asset has raised its dividend for 2 consecutive years and The GEO Group has raised its dividend for 4 consecutive years. Anworth Mortgage Asset is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Anworth Mortgage Asset and The GEO Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Anworth Mortgage Asset 0 1 0 0 2.00
The GEO Group 0 1 2 0 2.67

Anworth Mortgage Asset presently has a consensus target price of $6.00, suggesting a potential upside of 7.91%. The GEO Group has a consensus target price of $33.78, suggesting a potential upside of 43.30%. Given The GEO Group’s stronger consensus rating and higher probable upside, analysts clearly believe The GEO Group is more favorable than Anworth Mortgage Asset.

Volatility and Risk

Anworth Mortgage Asset has a beta of 0.19, meaning that its share price is 81% less volatile than the S&P 500. Comparatively, The GEO Group has a beta of 1.52, meaning that its share price is 52% more volatile than the S&P 500.

Summary

The GEO Group beats Anworth Mortgage Asset on 13 of the 17 factors compared between the two stocks.

Anworth Mortgage Asset Company Profile

Anworth Mortgage Asset Corporation is a real estate investment trust (REIT). The Company’s investment objective is to provide risk-adjusted total returns to its stockholders over the long-term primarily through dividends and secondarily through capital appreciation. Its strategy is to invest in residential mortgage-backed securities (MBS) (both Agency MBS and Non-Agency MBS), residential mortgage loans and residential rental properties. Its principal business objective is to generate net income for distribution to its stockholders primarily based upon the spread between the interest income on its mortgage assets and its borrowing costs to finance its acquisition of those assets. The Company finances residential mortgage loans through asset-backed securities, which are issued by the consolidated securitization trusts. The Company is engaged in investing in, financing and managing a portfolio of residential mortgage-backed securities and residential mortgage loans.

The GEO Group Company Profile

The GEO Group, Inc. is a real estate investment trust (REIT) specializing in the ownership, leasing and management of correctional, detention and re-entry facilities and the provision of community-based services and youth services in the United States, Australia, South Africa, the United Kingdom and Canada. As of December 31, 2013, its worldwide operations included the management and/or ownership of approximately 77,000 beds at 98 correctional, detention and community based facilities, including idle faclities and projects under development, and also included the provision of monitoring of more than 70,000 offenders in a community-based environment on behalf of approximately 900 federal, state and local correctional agencies located in all 50 states. The Company operates in four segments: United States Corrections and Detention segment, segment; International Services segment and Facility Construction and Design segment.

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