Claros Mortgage Trust (NYSE:CMTG) and Two Harbors Investments (NYSE:TWO) Head-To-Head Review

Two Harbors Investments (NYSE:TWO) and Claros Mortgage Trust (NYSE:CMTG) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Insider & Institutional Ownership

64.2% of Two Harbors Investments shares are held by institutional investors. Comparatively, 89.5% of Claros Mortgage Trust shares are held by institutional investors. 0.7% of Two Harbors Investments shares are held by company insiders. Comparatively, 2.6% of Claros Mortgage Trust 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.

Profitability

This table compares Two Harbors Investments and Claros Mortgage Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Two Harbors Investments	-6.09%	12.79%	1.44%
Claros Mortgage Trust	-354.13%	-19.70%	-6.52%

Risk & Volatility

Two Harbors Investments has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500. Comparatively, Claros Mortgage Trust has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500.

Earnings and Valuation

This table compares Two Harbors Investments and Claros Mortgage Trust”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Two Harbors Investments	$366.65 million	3.47	-$454.30 million	($0.74)	-16.33
Claros Mortgage Trust	$187.83 million	1.45	-$489.07 million	($3.83)	-0.50

Two Harbors Investments has higher revenue and earnings than Claros Mortgage Trust. Two Harbors Investments is trading at a lower price-to-earnings ratio than Claros Mortgage Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and recommmendations for Two Harbors Investments and Claros Mortgage Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Two Harbors Investments	2	4	0	1	2.00
Claros Mortgage Trust	3	1	0	0	1.25

Two Harbors Investments currently has a consensus target price of $12.75, suggesting a potential upside of 5.50%. Claros Mortgage Trust has a consensus target price of $2.22, suggesting a potential upside of 15.15%. Given Claros Mortgage Trust’s higher probable upside, analysts plainly believe Claros Mortgage Trust is more favorable than Two Harbors Investments.

Summary

Two Harbors Investments beats Claros Mortgage Trust on 9 of the 14 factors compared between the two stocks.

About Two Harbors Investments

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.

About Claros Mortgage Trust

Claros Mortgage Trust, Inc. operates as a real estate investment trust. It focuses on originating senior and subordinate loans on transitional commercial real estate assets in the United States. 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. The company was incorporated in 2015 and is headquartered in New York, New York.