Analyzing Lument Finance Trust (NYSE:LFT) and PennyMac Mortgage Investment Trust (NYSE:PMT)

PennyMac Mortgage Investment Trust (NYSE:PMT) and Lument Finance Trust (NYSE:LFT) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, valuation and dividends.

Profitability

This table compares PennyMac Mortgage Investment Trust and Lument Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PennyMac Mortgage Investment Trust	47.79%	12.50%	0.76%
Lument Finance Trust	-18.00%	0.86%	0.12%

Risk and Volatility

PennyMac Mortgage Investment Trust has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, Lument Finance Trust has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.

Valuation & Earnings

This table compares PennyMac Mortgage Investment Trust and Lument Finance Trust”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PennyMac Mortgage Investment Trust	$203.88 million	4.01	$127.87 million	$1.42	6.60
Lument Finance Trust	$79.00 million	0.44	-$2.74 million	($0.36)	-1.85

PennyMac Mortgage Investment Trust has higher revenue and earnings than Lument Finance Trust. Lument Finance Trust is trading at a lower price-to-earnings ratio than PennyMac Mortgage Investment Trust, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

67.4% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. Comparatively, 19.5% of Lument Finance Trust shares are owned by institutional investors. 1.0% of PennyMac Mortgage Investment Trust shares are owned by insiders. Comparatively, 3.3% of Lument Finance Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

PennyMac Mortgage Investment Trust pays an annual dividend of $1.60 per share and has a dividend yield of 17.1%. Lument Finance Trust pays an annual dividend of $0.16 per share and has a dividend yield of 24.0%. PennyMac Mortgage Investment Trust pays out 112.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lument Finance Trust pays out -44.4% of its earnings in the form of a dividend. Lument Finance Trust has raised its dividend for 2 consecutive years. Lument Finance Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for PennyMac Mortgage Investment Trust and Lument Finance Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PennyMac Mortgage Investment Trust	2	4	3	0	2.11
Lument Finance Trust	1	0	0	0	1.00

PennyMac Mortgage Investment Trust currently has a consensus price target of $11.50, suggesting a potential upside of 22.73%. Given PennyMac Mortgage Investment Trust’s stronger consensus rating and higher possible upside, equities analysts clearly believe PennyMac Mortgage Investment Trust is more favorable than Lument Finance Trust.

Summary

PennyMac Mortgage Investment Trust beats Lument Finance Trust on 13 of the 17 factors compared between the two stocks.

About PennyMac Mortgage Investment Trust

PennyMac Mortgage Investment Trust, through its subsidiary, primarily invests in mortgage-related assets in the United States. The company operates through: Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production segments. Its Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, subordinate mortgage-backed securities (MBS), distressed loans, and real estate. The company's Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency MBS, as well as related interest rate hedging activities. Its Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. The company primarily sells its loans to government-sponsored entities or PennyMac Loan Services, LLC. 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 shareholders. The company was incorporated in 2009 and is headquartered in Westlake Village, California.

About Lument Finance Trust

Lument Finance Trust, Inc., a real estate investment trust, focuses on investing in, financing, and managing a portfolio of commercial real estate (CRE) debt investments in the United States. The company primarily invests in transitional floating rate CRE mortgage loans on middle market multi-family assets; and other CRE -related investments, including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans, and other CRE debt instruments. Lument Finance Trust, Inc. is qualified as a real estate investment trust (REIT) under the Internal Revenue Code of 1986. As a REIT, it would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Hunt Companies Finance Trust, Inc. and changed its name to Lument Finance Trust, Inc. in December 2020. Lument Finance Trust, Inc. was incorporated in 2012 and is headquartered in New York, New York.