MTGE Investment (NASDAQ: MTGE) and CYS Investments (NYSE:CYS) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Valuation & Earnings

This table compares MTGE Investment and CYS Investments’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MTGE Investment $108.19 million 7.87 $43.67 million $1.80 10.33
CYS Investments $294.54 million 4.33 $16.39 million ($0.20) -41.15

MTGE Investment has higher earnings, but lower revenue than CYS Investments. CYS Investments is trading at a lower price-to-earnings ratio than MTGE Investment, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

74.5% of MTGE Investment shares are owned by institutional investors. Comparatively, 62.3% of CYS Investments shares are owned by institutional investors. 1.1% of MTGE Investment shares are owned by insiders. Comparatively, 1.0% of CYS Investments shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

MTGE Investment pays an annual dividend of $1.80 per share and has a dividend yield of 9.7%. CYS Investments pays an annual dividend of $1.00 per share and has a dividend yield of 12.2%. MTGE Investment pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CYS Investments pays out -500.0% of its earnings in the form of a dividend. CYS Investments is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for MTGE Investment and CYS Investments, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MTGE Investment 0 1 3 0 2.75
CYS Investments 1 3 0 0 1.75

MTGE Investment currently has a consensus price target of $20.50, suggesting a potential upside of 10.22%. CYS Investments has a consensus price target of $8.00, suggesting a potential downside of 2.79%. Given MTGE Investment’s stronger consensus rating and higher possible upside, equities analysts plainly believe MTGE Investment is more favorable than CYS Investments.

Profitability

This table compares MTGE Investment and CYS Investments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MTGE Investment 89.01% 10.52% 1.72%
CYS Investments -2.59% 13.30% 1.37%

Risk and Volatility

MTGE Investment has a beta of 0.46, suggesting that its stock price is 54% less volatile than the S&P 500. Comparatively, CYS Investments has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500.

Summary

MTGE Investment beats CYS Investments on 11 of the 16 factors compared between the two stocks.

MTGE Investment Company Profile

MTGE Investment Corp., formerly American Capital Mortgage Investment Corp., is a real estate investment trust. The Company invests in, finances and manages a leveraged portfolio of real estate-related investments, which include agency residential mortgage-backed securities (RMBS), non-agency securities, other mortgage-related investments and other real estate investments. Agency RMBS includes residential mortgage pass-through certificates and collateralized mortgage obligations (CMOs) structured from residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a government-sponsored enterprise (GSE), or by a United States Government agency, such as Government National Mortgage Association (Ginnie Mae). Non-agency securities include securities backed by residential mortgages that are not guaranteed by a GSE or the United States Government agency, and credit risk transfer securities (CRT). The Company’s manager is MTGE Management, LLC.

CYS Investments Company Profile

CYS Investments, Inc. is a specialty finance company. The Company’s objective is to provide consistent returns to its investors through a combination of dividends and capital appreciation. It invests in agency residential mortgage-backed security (RMBS) collateralized by fixed rate single-family residential mortgage loans; adjustable-rate mortgages (ARMs), which have coupon rates that reset monthly, or hybrid ARMs, which have a coupon rate that is fixed for an initial period. In addition, it has investments in collateralized mortgage obligations issued by a government agency or government-sponsored entity (GSE) that are collateralized by Agency RMBS. Its investments consist of residential mortgage pass-through securities for which the principal and interest payments are guaranteed by a GSE, such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, or by the United States Government agency, such as Government National Mortgage Association.

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