Great Ajax (NYSE: AJX) and KKR Real Estate Finance Trust (NYSE:KREF) are both small-cap financials companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Dividends

Great Ajax pays an annual dividend of $1.20 per share and has a dividend yield of 9.4%. KKR Real Estate Finance Trust pays an annual dividend of $1.48 per share and has a dividend yield of 7.9%. Great Ajax 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. KKR Real Estate Finance Trust has increased its dividend for 2 consecutive years.

Valuation and Earnings

This table compares Great Ajax and KKR Real Estate Finance Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Great Ajax $44.69 million 5.21 $27.83 million $1.34 9.52
KKR Real Estate Finance Trust $41.19 million 24.56 $31.15 million N/A N/A

KKR Real Estate Finance Trust has lower revenue, but higher earnings than Great Ajax.

Profitability

This table compares Great Ajax and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Great Ajax 55.23% 10.04% 2.77%
KKR Real Estate Finance Trust 77.41% 6.08% 0.75%

Institutional & Insider Ownership

71.4% of Great Ajax shares are owned by institutional investors. Comparatively, 65.7% of KKR Real Estate Finance Trust shares are owned by institutional investors. 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 company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations for Great Ajax and KKR Real Estate Finance Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Great Ajax 0 1 3 0 2.75
KKR Real Estate Finance Trust 1 2 1 0 2.00

Great Ajax presently has a consensus price target of $14.75, suggesting a potential upside of 15.60%. KKR Real Estate Finance Trust has a consensus price target of $22.50, suggesting a potential upside of 19.43%. Given KKR Real Estate Finance Trust’s higher probable upside, analysts clearly believe KKR Real Estate Finance Trust is more favorable than Great Ajax.

Summary

Great Ajax beats KKR Real Estate Finance Trust on 8 of the 14 factors compared between the two stocks.

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.

KKR Real Estate Finance Trust Company Profile

KKR Real Estate Finance Trust Inc is a real estate finance company that focuses primarily on originating and acquiring senior mortgage loans secured by commercial real estate assets (CRE). KKR manages investments across multiple asset classes, including private equity, real estate, energy, infrastructure, credit and hedge funds. The Company’s investment strategy is to originate or acquire senior mortgage loans collateralized by institutional-quality CRE assets. Its target assets also include mezzanine loans, preferred equity and other debt-oriented instruments. The Company’s investment objective is capital preservation and generating attractive risk-adjusted returns for its stockholders over the long term, primarily through dividends.

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