BRT Realty Trust (NYSE: BRT) and ARMOUR Residential REIT (NYSE:ARR) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, valuation, risk, institutional ownership, profitability and dividends.

Risk and Volatility

BRT Realty Trust has a beta of 0.22, suggesting that its stock price is 78% less volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500.

Valuation and Earnings

This table compares BRT Realty Trust and ARMOUR Residential REIT’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BRT Realty Trust $94.26 million 1.65 $31.28 million $0.80 13.89
ARMOUR Residential REIT $263.99 million 4.08 -$45.51 million $5.06 5.09

BRT Realty Trust has higher earnings, but lower revenue than ARMOUR Residential REIT. ARMOUR Residential REIT is trading at a lower price-to-earnings ratio than BRT Realty Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations for BRT Realty Trust and ARMOUR Residential REIT, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BRT Realty Trust 0 1 2 0 2.67
ARMOUR Residential REIT 0 0 0 0 N/A

BRT Realty Trust currently has a consensus price target of $11.13, suggesting a potential upside of 0.14%. Given BRT Realty Trust’s higher possible upside, equities analysts plainly believe BRT Realty Trust is more favorable than ARMOUR Residential REIT.

Insider & Institutional Ownership

22.1% of BRT Realty Trust shares are held by institutional investors. Comparatively, 57.5% of ARMOUR Residential REIT shares are held by institutional investors. 41.9% of BRT Realty Trust shares are held by company insiders. Comparatively, 1.2% of ARMOUR Residential REIT shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares BRT Realty Trust and ARMOUR Residential REIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BRT Realty Trust 10.81% 5.07% 1.24%
ARMOUR Residential REIT 76.46% 9.39% 1.37%

Dividends

BRT Realty Trust pays an annual dividend of $0.72 per share and has a dividend yield of 6.5%. ARMOUR Residential REIT pays an annual dividend of $2.28 per share and has a dividend yield of 8.9%. BRT Realty Trust pays out 90.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ARMOUR Residential REIT pays out 45.1% of its earnings in the form of a dividend. BRT Realty Trust has raised its dividend for 2 consecutive years. ARMOUR Residential REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

ARMOUR Residential REIT beats BRT Realty Trust on 10 of the 16 factors compared between the two stocks.

About BRT Realty Trust

BRT Apartments Corp. is a real estate investment trust (REIT). The Trust is focused on the ownership, operation and development of multi-family properties. These activities are primarily conducted through joint ventures in which the Trust has an equity interest in the entity owning the property. The Trust’s segments include Multi-Family Real Estate and Other Assets. The Multi-Family Real Estate segment includes the ownership, operation and development of multi-family properties. The Other Assets segment includes the ownership and operation of the Trust’s other real estate assets and a real estate loan. As of December 31, 2016, the Trust owned 30 multi-family properties with 8,624 units located in 11 states (including 271 units at a property in the lease up stage), and interests in two unconsolidated joint ventures. The Trust also owns and operates various other real estate assets.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. is a real estate investment trust. The Company invests in and manages a leveraged portfolio of mortgage-backed securities (MBS) and mortgage loans. The Company invests in residential mortgage backed securities issued or guaranteed by a United States Government-sponsored enterprise (GSE), such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or a government agency, such as the Government National Mortgage Association (collectively, Agency Securities). The Company also invests in Interest-Only Securities, which are the interest portions of Agency Securities that are separated and sold individually from the principal portion of the same payment. The Company raises funds for additional funding through equity offerings (including preferred equity), unsecured debt securities and convertible securities (including warrants, preferred equity and debt), among others. It is managed by ARMOUR Capital Management LP.

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