New Residential Investment Corp. (NYSE: NRZ) and Dynex Capital (NYSE:DX) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Profitability

This table compares New Residential Investment Corp. and Dynex Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
New Residential Investment Corp. 55.85% 19.02% 3.80%
Dynex Capital 93.54% 11.04% 1.25%

Volatility & Risk

New Residential Investment Corp. has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500. Comparatively, Dynex Capital has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500.

Institutional and Insider Ownership

47.8% of New Residential Investment Corp. shares are held by institutional investors. Comparatively, 44.4% of Dynex Capital shares are held by institutional investors. 4.0% of New Residential Investment Corp. shares are held by insiders. Comparatively, 7.1% of Dynex Capital shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

New Residential Investment Corp. pays an annual dividend of $2.00 per share and has a dividend yield of 12.1%. Dynex Capital pays an annual dividend of $0.72 per share and has a dividend yield of 10.2%. New Residential Investment Corp. pays out 72.2% of its earnings in the form of a dividend. Dynex Capital pays out 46.8% 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. Dynex Capital has increased its dividend for 3 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for New Residential Investment Corp. and Dynex Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
New Residential Investment Corp. 0 2 6 0 2.75
Dynex Capital 0 3 0 0 2.00

New Residential Investment Corp. currently has a consensus price target of $16.86, suggesting a potential upside of 2.29%. Dynex Capital has a consensus price target of $7.13, suggesting a potential upside of 0.49%. Given New Residential Investment Corp.’s stronger consensus rating and higher probable upside, analysts plainly believe New Residential Investment Corp. is more favorable than Dynex Capital.

Valuation & Earnings

This table compares New Residential Investment Corp. and Dynex Capital’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
New Residential Investment Corp. $1.30 billion 3.90 $851.39 million $2.77 5.95
Dynex Capital $105.39 million 3.31 $75.82 million $1.54 4.60

New Residential Investment Corp. has higher revenue and earnings than Dynex Capital. Dynex Capital is trading at a lower price-to-earnings ratio than New Residential Investment Corp., indicating that it is currently the more affordable of the two stocks.

Summary

New Residential Investment Corp. beats Dynex Capital on 12 of the 17 factors compared between the two stocks.

New Residential Investment Corp. Company Profile

New Residential Investment Corp. is a real estate investment trust (REIT). The Company focuses on investing in, and managing, investments related to residential real estate. The Company’s segments include investments in excess mortgage servicing rights (Excess MSRs); investments in mortgage servicing rights (MSRs); investments in servicer advances; investments in real estate securities; investments in residential mortgage loans; investments in consumer loans, and corporate. Its portfolio includes mortgage servicing related assets, residential mortgage backed securities (RMBS), residential mortgage loans and other investments. The Company’s servicing related assets include its investments in Excess MSRs, MSRs and servicer advances. The Company invests in agency RMBS and non-agency RMBS. The Company’s other investments consist of consumer loans.

Dynex Capital Company Profile

Dynex Capital, Inc. is an internally managed mortgage real estate investment trust, which invests in residential and commercial mortgage securities on a leveraged basis. The Company’s objective is to provide attractive risk-adjusted returns to its shareholders over the long term that is reflective of a leveraged fixed income portfolio with a focus on capital preservation. It seeks to provide returns to its shareholders through regular quarterly dividends and through capital appreciation. It invests in Agency and non-Agency mortgage-backed securities (MBS). MBS consists of residential MBS (RMBS), commercial MBS (CMBS) and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the United States Government or a government-sponsored entity (GSE), such as Fannie Mae and Freddie Mac.

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