New Residential Investment Corp. (NYSE: NRZ) and Five Oaks Investment Corp. (NYSE:OAKS) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, analyst recommendations, institutional ownership, earnings and profitability.

Volatility & Risk

New Residential Investment Corp. has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500. Comparatively, Five Oaks Investment Corp. has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500.

Insider and Institutional Ownership

47.8% of New Residential Investment Corp. shares are held by institutional investors. Comparatively, 33.7% of Five Oaks Investment Corp. shares are held by institutional investors. 4.0% of New Residential Investment Corp. shares are held by company insiders. Comparatively, 0.9% of Five Oaks Investment Corp. shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

New Residential Investment Corp. pays an annual dividend of $2.00 per share and has a dividend yield of 11.9%. Five Oaks Investment Corp. pays an annual dividend of $0.60 per share and has a dividend yield of 14.2%. New Residential Investment Corp. pays out 72.2% of its earnings in the form of a dividend. Five Oaks Investment Corp. pays out 89.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Five Oaks Investment Corp. has raised its dividend for 3 consecutive years. Five Oaks Investment Corp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for New Residential Investment Corp. and Five Oaks Investment Corp., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
New Residential Investment Corp. 0 2 5 0 2.71
Five Oaks Investment Corp. 0 1 0 0 2.00

New Residential Investment Corp. presently has a consensus price target of $16.83, indicating a potential upside of 0.50%. Given New Residential Investment Corp.’s stronger consensus rating and higher probable upside, research analysts clearly believe New Residential Investment Corp. is more favorable than Five Oaks Investment Corp..

Profitability

This table compares New Residential Investment Corp. and Five Oaks Investment Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
New Residential Investment Corp. 55.85% 19.02% 3.80%
Five Oaks Investment Corp. 12.65% 10.48% 0.48%

Valuation and Earnings

This table compares New Residential Investment Corp. and Five Oaks Investment Corp.’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
New Residential Investment Corp. $1.30 billion 3.96 $851.39 million $2.77 6.05
Five Oaks Investment Corp. $26.49 million 3.54 $14.83 million $0.67 6.33

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

Summary

New Residential Investment Corp. beats Five Oaks Investment Corp. on 13 of the 17 factors compared between the two stocks.

New Residential Investment Corp. Company Profile

New Residential Investment Corp. is a real estate investment trust (REIT). The Company focuses on investing in, and managing, investments related to residential real estate. The Company’s segments include investments in excess mortgage servicing rights (Excess MSRs); investments in mortgage servicing rights (MSRs); investments in servicer advances; investments in real estate securities; investments in residential mortgage loans; investments in consumer loans, and corporate. Its portfolio includes mortgage servicing related assets, residential mortgage backed securities (RMBS), residential mortgage loans and other investments. The Company’s servicing related assets include its investments in Excess MSRs, MSRs and servicer advances. The Company invests in agency RMBS and non-agency RMBS. The Company’s other investments consist of consumer loans.

Five Oaks Investment Corp. Company Profile

Five Oaks Investment Corp. is a real estate investment trust. The Company is focused on investing on a leveraged basis in mortgage and other real estate-related assets, particularly residential mortgage loans and mortgage-backed securities (MBS). The Company invests in various assets, such as Agency residential MBS (RMBS); securitizations backed by multi-family mortgage loans, or Multi-Family MBS; residential mortgage loans and other mortgage-related investments, including mortgage servicing rights (MSRs), and Non-Agency RMBS. The Company finances its investments in Agency RMBS, Multi-Family MBS, residential mortgage loans and Non-Agency RMBS primarily through short-term borrowings structured as repurchase agreements. The Company is externally managed and advised by Oak Circle Capital Partners LLC.

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