Chimera Investment (NYSE: CIM) and Great Ajax (NYSE:AJX) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, dividends, earnings, risk and profitability.

Dividends

Chimera Investment pays an annual dividend of $2.00 per share and has a dividend yield of 10.8%. Great Ajax pays an annual dividend of $1.20 per share and has a dividend yield of 8.7%. Chimera Investment pays out 61.3% of its earnings in the form of a dividend. Great Ajax pays out 78.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chimera Investment has increased its dividend for 2 consecutive years. Chimera Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Chimera Investment and Great Ajax’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Chimera Investment $934.07 million 3.72 $551.94 million $3.26 5.67
Great Ajax $44.69 million 5.64 $27.83 million $1.53 9.03

Chimera Investment has higher revenue and earnings than Great Ajax. Chimera Investment is trading at a lower price-to-earnings ratio than Great Ajax, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Chimera Investment has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, Great Ajax has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500.

Profitability

This table compares Chimera Investment and Great Ajax’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chimera Investment 58.21% 13.29% 2.33%
Great Ajax 55.23% 10.04% 2.77%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Chimera Investment and Great Ajax, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chimera Investment 0 4 0 0 2.00
Great Ajax 0 1 3 0 2.75

Chimera Investment currently has a consensus target price of $18.83, suggesting a potential upside of 1.91%. Great Ajax has a consensus target price of $14.75, suggesting a potential upside of 6.73%. Given Great Ajax’s stronger consensus rating and higher probable upside, analysts plainly believe Great Ajax is more favorable than Chimera Investment.

Insider & Institutional Ownership

50.7% of Chimera Investment shares are owned by institutional investors. Comparatively, 71.4% of Great Ajax shares are owned by institutional investors. 0.7% of Chimera Investment shares are owned by company insiders. Comparatively, 3.8% of Great Ajax shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Great Ajax beats Chimera Investment on 9 of the 17 factors compared between the two stocks.

Chimera Investment Company Profile

Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.

Great Ajax Company Profile

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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