Financial Contrast: Chimera Investment (CIM) versus AG Mortgage Investment (MITT)

AG Mortgage Investment (NYSE: MITT) and Chimera Investment (NYSE:CIM) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Insider & Institutional Ownership

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65.8% of AG Mortgage Investment shares are held by institutional investors. Comparatively, 50.2% of Chimera Investment shares are held by institutional investors. 1.6% of AG Mortgage Investment shares are held by insiders. Comparatively, 0.7% of Chimera Investment shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares AG Mortgage Investment and Chimera Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AG Mortgage Investment 92.01% 11.23% 1.81%
Chimera Investment 46.07% 12.92% 2.22%

Dividends

AG Mortgage Investment pays an annual dividend of $1.90 per share and has a dividend yield of 10.9%. Chimera Investment pays an annual dividend of $2.00 per share and has a dividend yield of 11.5%. AG Mortgage Investment pays out 50.5% of its earnings in the form of a dividend. Chimera Investment pays out 76.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chimera Investment has raised its dividend for 3 consecutive years. Chimera Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for AG Mortgage Investment and Chimera Investment, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AG Mortgage Investment 0 3 0 0 2.00
Chimera Investment 0 2 2 0 2.50

AG Mortgage Investment currently has a consensus target price of $18.25, suggesting a potential upside of 5.07%. Chimera Investment has a consensus target price of $18.75, suggesting a potential upside of 7.70%. Given Chimera Investment’s stronger consensus rating and higher probable upside, analysts plainly believe Chimera Investment is more favorable than AG Mortgage Investment.

Volatility and Risk

AG Mortgage Investment has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500. Comparatively, Chimera Investment has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500.

Valuation and Earnings

This table compares AG Mortgage Investment and Chimera Investment’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AG Mortgage Investment $128.85 million 3.80 $118.55 million $3.76 4.62
Chimera Investment $1.14 billion 2.87 $524.66 million $2.61 6.67

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

Summary

Chimera Investment beats AG Mortgage Investment on 10 of the 17 factors compared between the two stocks.

AG Mortgage Investment Company Profile

AG Mortgage Investment Trust, Inc., a real estate investment trust, focuses on investing in, acquiring, and managing a portfolio of residential mortgage assets, other real estate-related securities, and financial assets. The company invests in residential mortgage-backed securities (RMBS) issued or guaranteed by a U.S. government agency or U.S. government-sponsored entities; and fixed- and floating-rate residential non-agency RMBS that are not issued by a U.S. government agencies or U.S. government-sponsored entities. The company also invests in other real estate-related assets and financial assets, including fixed- and floating-rate commercial mortgage-backed securities, such as investment grade and non-investment grade classes; residential mortgage loans secured by residential real property; and commercial mortgage loans secured by commercial real property comprising mezzanine loans and preferred equity. In addition, its other real estate-related assets and financial assets investments include first or second lien loans, subordinate interests in first mortgages, and mezzanine financing secured by interests in commercial real estate, as well as bridge loans to be used in the acquisition, construction, or redevelopment of a property; other real estate structured finance products, mortgage servicing rights, real estate-related loans and securities, and other financial assets; and investment grade and non-investment grade debt and equity tranches of securitizations backed by various asset classes, such as small balance commercial mortgages, aircraft, automobiles, credit cards, equipment, manufactured housing, franchises, recreational vehicles, and student loans. 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 incorporated in 2011 and is based in New York, New York.

Chimera Investment Company Profile

Chimera Investment Corporation operates as a real estate investment trust in the United States. The company, through its subsidiaries, invests in a portfolio of mortgage assets, including residential mortgage loans, agency and non-agency residential mortgage-backed securities, agency mortgage-backed securities secured by pools of commercial mortgage loans, commercial mortgage loans, and other real estate related securities. It has elected to be taxed as a real estate investment trust. As a result, the company would not be subject to U.S. federal income tax, if it distributes at least 90% of its REIT taxable income to its shareholders. Chimera Investment Corporation was founded in 2007 and is based in New York, New York.

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