Apollo Residential Mortgage (NYSE: AMTG) and Chimera Investment Corporation (NYSE:CIM) are both mortgage reits companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, dividends, institutional ownership, profitability and analyst recommendations.
This table compares Apollo Residential Mortgage and Chimera Investment Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Apollo Residential Mortgage||56.35%||10.11%||2.60%|
|Chimera Investment Corporation||58.21%||13.29%||2.33%|
Insider & Institutional Ownership
50.8% of Chimera Investment Corporation shares are owned by institutional investors. 0.7% of Chimera Investment Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Valuation & Earnings
This table compares Apollo Residential Mortgage and Chimera Investment Corporation’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Apollo Residential Mortgage||N/A||N/A||N/A||($0.94)||-14.51|
|Chimera Investment Corporation||$934.07 million||3.65||$551.94 million||$3.25||5.58|
Chimera Investment Corporation has higher revenue and earnings than Apollo Residential Mortgage. Apollo Residential Mortgage is trading at a lower price-to-earnings ratio than Chimera Investment Corporation, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current recommendations and price targets for Apollo Residential Mortgage and Chimera Investment Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Apollo Residential Mortgage||0||0||0||0||N/A|
|Chimera Investment Corporation||0||4||0||0||2.00|
Chimera Investment Corporation has a consensus target price of $18.83, suggesting a potential upside of 3.82%. Given Chimera Investment Corporation’s higher probable upside, analysts clearly believe Chimera Investment Corporation is more favorable than Apollo Residential Mortgage.
Apollo Residential Mortgage pays an annual dividend of $1.92 per share and has a dividend yield of 14.1%. Chimera Investment Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 11.0%. Apollo Residential Mortgage pays out -204.3% of its earnings in the form of a dividend. Chimera Investment Corporation pays out 61.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Apollo Residential Mortgage has increased its dividend for 2 consecutive years and Chimera Investment Corporation has increased its dividend for 2 consecutive years. Apollo Residential Mortgage is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Apollo Residential Mortgage has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500. Comparatively, Chimera Investment Corporation has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500.
Chimera Investment Corporation beats Apollo Residential Mortgage on 8 of the 11 factors compared between the two stocks.
Apollo Residential Mortgage Company Profile
Apollo Residential Mortgage, Inc. is a holding company that conducts its business primarily through ARM Operating, LLC and other operating subsidiaries. The Company is primarily engaged in the business of investing in residential mortgage assets in the United States. The Company seeks to generate risk-adjusted returns from its assets to its stockholders over the long term, primarily through dividend distributions and secondarily through capital appreciation. The Company’s portfolio consists of agency residential mortgage-backed securities (RMBS), non-Agency RMBS; securitized mortgage loans, and other mortgage and mortgage related investment securities and other mortgage related investments. The Company may invest in a range of other residential mortgage and mortgage-related assets. The Company is externally managed and advised by ARM Manager, LLC, an indirect subsidiary of Apollo Global Management, LLC.
Chimera Investment Corporation Company Profile
Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.
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