Arbor Realty Trust (NYSE:ABR) & Annaly Capital Management (NYSE:NLY) Head to Head Contrast

Arbor Realty Trust (NYSE:ABR) and Annaly Capital Management (NYSE:NLY) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, profitability, analyst recommendations, institutional ownership and dividends.

Risk and Volatility

Arbor Realty Trust has a beta of 1.39, suggesting that its stock price is 39% more volatile than the S&P 500. Comparatively, Annaly Capital Management has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Arbor Realty Trust and Annaly Capital Management, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arbor Realty Trust	4	2	1	0	1.57
Annaly Capital Management	1	4	5	0	2.40

Arbor Realty Trust presently has a consensus target price of $9.63, suggesting a potential upside of 23.87%. Annaly Capital Management has a consensus target price of $21.86, suggesting a potential downside of 2.29%. Given Arbor Realty Trust’s higher possible upside, research analysts plainly believe Arbor Realty Trust is more favorable than Annaly Capital Management.

Earnings and Valuation

This table compares Arbor Realty Trust and Annaly Capital Management”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arbor Realty Trust	$1.17 billion	1.30	$264.64 million	$0.80	9.71
Annaly Capital Management	$4.84 billion	3.16	$1.00 billion	$2.16	10.36

Annaly Capital Management has higher revenue and earnings than Arbor Realty Trust. Arbor Realty Trust is trading at a lower price-to-earnings ratio than Annaly Capital Management, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Arbor Realty Trust and Annaly Capital Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arbor Realty Trust	20.07%	11.63%	2.13%
Annaly Capital Management	26.68%	15.96%	1.71%

Dividends

Arbor Realty Trust pays an annual dividend of $1.20 per share and has a dividend yield of 15.4%. Annaly Capital Management pays an annual dividend of $2.80 per share and has a dividend yield of 12.5%. Arbor Realty Trust pays out 150.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Annaly Capital Management pays out 129.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Annaly Capital Management has increased its dividend for 2 consecutive years.

Institutional and Insider Ownership

57.3% of Arbor Realty Trust shares are held by institutional investors. Comparatively, 51.6% of Annaly Capital Management shares are held by institutional investors. 3.8% of Arbor Realty Trust shares are held by company insiders. Comparatively, 0.2% of Annaly Capital Management shares are held 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.

Summary

Annaly Capital Management beats Arbor Realty Trust on 11 of the 17 factors compared between the two stocks.

About Arbor Realty Trust

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates through Structured Business and Agency Business segments. It primarily invests in bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. In addition, the company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Arbor Realty Trust, Inc. was incorporated in 2003 and is headquartered in Uniondale, New York.

About Annaly Capital Management

Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.