Head to Head Review: ARMOUR Residential REIT (NYSE:ARR) and Ladder Capital (NYSE:LADR)

ARMOUR Residential REIT (NYSE:ARR) and Ladder Capital (NYSE:LADR) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Valuation & Earnings

This table compares ARMOUR Residential REIT and Ladder Capital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARMOUR Residential REIT	$800.42 million	2.62	$322.69 million	$1.92	8.80
Ladder Capital	$213.42 million	6.15	$64.18 million	$0.44	23.44

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

Insider & Institutional Ownership

54.2% of ARMOUR Residential REIT shares are held by institutional investors. Comparatively, 62.3% of Ladder Capital shares are held by institutional investors. 0.2% of ARMOUR Residential REIT shares are held by company insiders. Comparatively, 12.0% of Ladder Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

ARMOUR Residential REIT has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500. Comparatively, Ladder Capital has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500.

Profitability

This table compares ARMOUR Residential REIT and Ladder Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARMOUR Residential REIT	27.43%	15.39%	1.65%
Ladder Capital	13.82%	5.73%	1.70%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for ARMOUR Residential REIT and Ladder Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARMOUR Residential REIT	1	2	2	0	2.20
Ladder Capital	1	1	4	0	2.50

ARMOUR Residential REIT presently has a consensus target price of $18.50, suggesting a potential upside of 9.52%. Ladder Capital has a consensus target price of $12.75, suggesting a potential upside of 23.61%. Given Ladder Capital’s stronger consensus rating and higher probable upside, analysts clearly believe Ladder Capital is more favorable than ARMOUR Residential REIT.

Dividends

ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 17.0%. Ladder Capital pays an annual dividend of $0.92 per share and has a dividend yield of 8.9%. ARMOUR Residential REIT 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. Ladder Capital pays out 209.1% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. Its securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans; and unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.

About Ladder Capital

Ladder Capital Corp operates as an internally-managed real estate investment trust in the United States. It operates through three segments: Loans, Securities, and Real Estate. The Loans segment originates conduit first mortgage loans that are secured by cash-flowing commercial real estate; and originates and invests in balance sheet first mortgage loans secured by commercial real estate properties that are undergoing transition, including lease-up, sell-out, and renovation or repositioning. It also invests in note purchase financings, subordinated debt, mezzanine debt, and other structured finance products related to commercial real estate. The Securities segment invests in commercial mortgage-backed securities, U.S. treasury and agency, corporate bonds, and equity securities. The Real Estate segment owns and invests in a portfolio of commercial and residential real estate properties, such as leased properties, office buildings, student housing portfolios, hotels, industrial buildings, shopping center, and condominium units. 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. The company was founded in 2008 and is headquartered in New York, New York.