Apollo Commercial Real Estate Finance (NYSE:ARI – Get Free Report) and Two Harbors Investment (NYSE:TWO – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.
Volatility and Risk
Apollo Commercial Real Estate Finance has a beta of 1.76, suggesting that its stock price is 76% more volatile than the S&P 500. Comparatively, Two Harbors Investment has a beta of 1.86, suggesting that its stock price is 86% more volatile than the S&P 500.
Valuation & Earnings
This table compares Apollo Commercial Real Estate Finance and Two Harbors Investment’s top-line revenue, earnings per share (EPS) and valuation.
Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
Apollo Commercial Real Estate Finance | $344.59 million | 4.57 | $58.13 million | ($0.78) | -14.21 |
Two Harbors Investment | $480.36 million | 2.97 | -$106.37 million | $1.78 | 7.74 |
Analyst Ratings
This is a breakdown of recent ratings and price targets for Apollo Commercial Real Estate Finance and Two Harbors Investment, as reported by MarketBeat.com.
Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
Apollo Commercial Real Estate Finance | 1 | 4 | 0 | 0 | 1.80 |
Two Harbors Investment | 0 | 6 | 2 | 0 | 2.25 |
Apollo Commercial Real Estate Finance presently has a consensus target price of $10.25, indicating a potential downside of 7.49%. Two Harbors Investment has a consensus target price of $14.64, indicating a potential upside of 6.22%. Given Two Harbors Investment’s stronger consensus rating and higher probable upside, analysts clearly believe Two Harbors Investment is more favorable than Apollo Commercial Real Estate Finance.
Profitability
This table compares Apollo Commercial Real Estate Finance and Two Harbors Investment’s net margins, return on equity and return on assets.
Net Margins | Return on Equity | Return on Assets | |
Apollo Commercial Real Estate Finance | -28.20% | 5.88% | 1.38% |
Two Harbors Investment | 56.90% | 2.16% | 0.25% |
Dividends
Apollo Commercial Real Estate Finance pays an annual dividend of $1.40 per share and has a dividend yield of 12.6%. Two Harbors Investment pays an annual dividend of $1.80 per share and has a dividend yield of 13.1%. Apollo Commercial Real Estate Finance pays out -179.5% of its earnings in the form of a dividend. Two Harbors Investment pays out 101.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Insider & Institutional Ownership
54.4% of Apollo Commercial Real Estate Finance shares are owned by institutional investors. Comparatively, 64.2% of Two Harbors Investment shares are owned by institutional investors. 0.7% of Apollo Commercial Real Estate Finance shares are owned by company insiders. Comparatively, 0.6% of Two Harbors Investment shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Summary
Two Harbors Investment beats Apollo Commercial Real Estate Finance on 10 of the 16 factors compared between the two stocks.
About Apollo Commercial Real Estate Finance
Apollo Commercial Real Estate Finance, Inc. operates as a real estate investment trust (REIT) that originates, acquires, invests in, and manages commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments in the United States, the United Kingdom, and Europe. It is qualified as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income taxes, if the company distributes at least 90% of its REIT taxable income to its stockholders. Apollo Commercial Real Estate Finance, Inc. was incorporated in 2009 and is based in New York, New York.
About Two Harbors Investment
Two Harbors Investment Corp. invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through RoundPoint in the United States. The company target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, hybrid mortgage loans, or derivatives; and other assets, such as financial and mortgage-related assets, including non-agency securities and non-hedging transactions. It qualifies as a REIT for federal income tax purposes. As a REIT, the company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in St. Louis Park, Minnesota.
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