Financial Analysis: American Capital Agency Corp. (AGNC) versus Great Ajax Corp. (AJX)
American Capital Agency Corp. (NASDAQ: AGNC) and Great Ajax Corp. (NYSE:AJX) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, dividends, earnings and risk.
This is a breakdown of recent ratings and recommmendations for American Capital Agency Corp. and Great Ajax Corp., as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Capital Agency Corp.||1||5||2||0||2.13|
|Great Ajax Corp.||0||3||2||0||2.40|
American Capital Agency Corp. currently has a consensus target price of $19.61, indicating a potential downside of 9.89%. Great Ajax Corp. has a consensus target price of $15.20, indicating a potential upside of 4.97%. Given Great Ajax Corp.’s stronger consensus rating and higher probable upside, analysts clearly believe Great Ajax Corp. is more favorable than American Capital Agency Corp..
Earnings & Valuation
This table compares American Capital Agency Corp. and Great Ajax Corp.’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|American Capital Agency Corp.||$1.70 billion||N/A||N/A||$4.84||4.50|
|Great Ajax Corp.||$50.65 million||5.04||$27.67 million||$1.57||9.22|
Great Ajax Corp. has higher revenue, but lower earnings than American Capital Agency Corp.. American Capital Agency Corp. is trading at a lower price-to-earnings ratio than Great Ajax Corp., indicating that it is currently the more affordable of the two stocks.
This table compares American Capital Agency Corp. and Great Ajax Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Capital Agency Corp.||161.49%||12.08%||1.55%|
|Great Ajax Corp.||58.46%||10.22%||3.02%|
Volatility & Risk
American Capital Agency Corp. has a beta of 0.2, indicating that its stock price is 80% less volatile than the S&P 500. Comparatively, Great Ajax Corp. has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500.
American Capital Agency Corp. pays an annual dividend of $2.16 per share and has a dividend yield of 9.9%. Great Ajax Corp. pays an annual dividend of $1.20 per share and has a dividend yield of 8.3%. American Capital Agency Corp. pays out 44.6% of its earnings in the form of a dividend. Great Ajax Corp. pays out 76.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Capital Agency Corp. is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider and Institutional Ownership
56.1% of American Capital Agency Corp. shares are held by institutional investors. Comparatively, 75.3% of Great Ajax Corp. shares are held by institutional investors. 0.5% of American Capital Agency Corp. shares are held by company insiders. Comparatively, 3.8% of Great Ajax Corp. shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Great Ajax Corp. beats American Capital Agency Corp. on 7 of the 13 factors compared between the two stocks.
About American Capital Agency Corp.
AGNC Investment Corp., formerly American Capital Agency Corp., is a real estate investment trust. The Company invests in agency residential mortgage-backed securities on a leveraged basis. Its investments consist of residential mortgage pass-through securities and collateralized mortgage obligations (CMOs) for which the principal and interest payments are guaranteed by a government-sponsored enterprise, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), or by the United States Government agency, such as the Government National Mortgage Association (Ginnie Mae) (collectively, GSEs). Its agency securities include agency residential mortgage-backed securities (Agency RMBS) and to-be-announced forward contracts (TBAs). Its Non-Agency Securities include credit risk transfer securities (CRT), non-agency residential mortgage-backed securities (Non-Agency RMBS) and commercial mortgage-backed securities (CMBS).
About Great Ajax Corp.
Great Ajax Corp. is an externally managed real estate company. The Company is focused on acquiring, investing in and managing a portfolio of re-performing and non-performing mortgage loans secured by single-family residences and single-family properties. Its segment is focused on non-performing mortgages and re-performing mortgages. It also invests in loans secured by multi-family residential and commercial mixed use retail/residential properties, as well as in the properties directly. It also holds real estate-owned properties (REO) acquired upon the foreclosure or other settlement of its owned non-performing loans, as well as through outright purchases. It is managed by Thetis Asset Management LLC, an affiliated entity. Its mortgage loans and other real estate assets are serviced by Gregory Funding LLC, an affiliated entity. The Company conducts its business through its operating partnership, Great Ajax Operating Partnership L.P.
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