Invesco Mortgage Capital (NYSE:IVR) and Highwoods Properties (NYSE:HIW) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, earnings, profitability and risk.
Volatility and Risk
Invesco Mortgage Capital has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 1.14, indicating that its share price is 14% more volatile than the S&P 500.
This table compares Invesco Mortgage Capital and Highwoods Properties’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Invesco Mortgage Capital||N/A||-8.30%||-0.91%|
Valuation and Earnings
This table compares Invesco Mortgage Capital and Highwoods Properties’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Invesco Mortgage Capital||$882.59 million||1.02||$364.10 million||$1.92||2.03|
|Highwoods Properties||$735.98 million||6.35||$136.92 million||$3.33||13.50|
Invesco Mortgage Capital has higher revenue and earnings than Highwoods Properties. Invesco Mortgage Capital is trading at a lower price-to-earnings ratio than Highwoods Properties, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent recommendations for Invesco Mortgage Capital and Highwoods Properties, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Invesco Mortgage Capital||4||0||0||0||1.00|
Invesco Mortgage Capital presently has a consensus price target of $2.56, suggesting a potential downside of 34.29%. Highwoods Properties has a consensus price target of $43.83, suggesting a potential downside of 2.46%. Given Highwoods Properties’ stronger consensus rating and higher probable upside, analysts clearly believe Highwoods Properties is more favorable than Invesco Mortgage Capital.
Invesco Mortgage Capital pays an annual dividend of $0.36 per share and has a dividend yield of 9.2%. Highwoods Properties pays an annual dividend of $1.92 per share and has a dividend yield of 4.3%. Invesco Mortgage Capital pays out 18.8% of its earnings in the form of a dividend. Highwoods Properties pays out 57.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Invesco Mortgage Capital has increased its dividend for 1 consecutive years and Highwoods Properties has increased its dividend for 1 consecutive years. Invesco Mortgage Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider and Institutional Ownership
51.3% of Invesco Mortgage Capital shares are owned by institutional investors. Comparatively, 93.2% of Highwoods Properties shares are owned by institutional investors. 0.2% of Invesco Mortgage Capital shares are owned by company insiders. Comparatively, 1.4% of Highwoods Properties shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Highwoods Properties beats Invesco Mortgage Capital on 11 of the 16 factors compared between the two stocks.
About Invesco Mortgage Capital
Invesco Mortgage Capital Inc. operates as a real estate investment trust (REIT) that primarily focuses on investing in, financing, and managing mortgage-backed securities and other mortgage-related assets. It invests in residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS) that are guaranteed by a U.S. government agency or federally chartered corporation; RMBS and CMBS that are not issued or guaranteed by a U.S. government agency or federally chartered corporation; credit risk transfer securities that are unsecured obligations issued by government-sponsored enterprises; residential and commercial mortgage loans; and other real estate-related financing arrangements. Invesco Mortgage Capital Inc. has elected to be taxed as a REIT and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formally known as Invesco Agency Securities Inc. and changed its name to Invesco Mortgage Capital Inc. in June 2008. Invesco Mortgage Capital Inc. was incorporated in 2008 and is headquartered in Atlanta, Georgia.
About Highwoods Properties
Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW) real estate investment trust (ÂREITÂ) and a member of the S&P MidCap 400 Index. Highwoods is a fully-integrated office REIT that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa.
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