Angel Oak Mortgage REIT (NYSE:AOMR) and Annaly Capital Management (NYSE:NLY) Critical Review

Angel Oak Mortgage REIT (NYSE:AOMR) and Annaly Capital Management (NYSE:NLY) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, earnings, valuation, profitability, analyst recommendations and dividends.

Insider and Institutional Ownership

80.2% of Angel Oak Mortgage REIT shares are owned by institutional investors. Comparatively, 51.6% of Annaly Capital Management shares are owned by institutional investors. 2.9% of Angel Oak Mortgage REIT shares are owned by insiders. Comparatively, 0.2% of Annaly Capital Management shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Angel Oak Mortgage REIT and Annaly Capital Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Angel Oak Mortgage REIT	30.65%	5.15%	0.50%
Annaly Capital Management	34.02%	15.80%	1.68%

Volatility and Risk

Angel Oak Mortgage REIT has a beta of 1.34, suggesting that its stock price is 34% more volatile than the S&P 500. Comparatively, Annaly Capital Management has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for Angel Oak Mortgage REIT and Annaly Capital Management, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Angel Oak Mortgage REIT	0	3	2	0	2.40
Annaly Capital Management	0	4	7	1	2.75

Angel Oak Mortgage REIT presently has a consensus price target of $11.08, indicating a potential upside of 35.74%. Annaly Capital Management has a consensus price target of $24.11, indicating a potential upside of 14.02%. Given Angel Oak Mortgage REIT’s higher possible upside, analysts plainly believe Angel Oak Mortgage REIT is more favorable than Annaly Capital Management.

Dividends

Angel Oak Mortgage REIT pays an annual dividend of $1.28 per share and has a dividend yield of 15.7%. Annaly Capital Management pays an annual dividend of $2.80 per share and has a dividend yield of 13.2%. Angel Oak Mortgage REIT pays out 70.7% of its earnings in the form of a dividend. Annaly Capital Management pays out 100.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Annaly Capital Management has increased its dividend for 2 consecutive years. Angel Oak Mortgage REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Angel Oak Mortgage REIT and Annaly Capital Management”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Angel Oak Mortgage REIT	$143.65 million	1.42	$44.02 million	$1.81	4.51
Annaly Capital Management	$2.24 billion	6.77	$2.03 billion	$2.78	7.61

Annaly Capital Management has higher revenue and earnings than Angel Oak Mortgage REIT. Angel Oak Mortgage REIT is trading at a lower price-to-earnings ratio than Annaly Capital Management, indicating that it is currently the more affordable of the two stocks.

Summary

Annaly Capital Management beats Angel Oak Mortgage REIT on 12 of the 18 factors compared between the two stocks.

About Angel Oak Mortgage REIT

Angel Oak Mortgage REIT, Inc., a real estate finance company, focuses on acquiring and investing in first lien non- qualified mortgage loans and other mortgage-related assets in the United States mortgage market. It offers investment securities; residential mortgage loans; and commercial mortgage 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 2018 and is headquartered in Atlanta, Georgia.

About Annaly Capital Management

Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.