Annaly Capital Management (NYSE:NLY) and ARMOUR Residential REIT (NYSE:ARR) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.
Profitability
This table compares Annaly Capital Management and ARMOUR Residential REIT's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Annaly Capital Management | -20.12% | 13.27% | 1.57% |
| ARMOUR Residential REIT | -68.21% | 10.28% | 1.37% |
Earnings and Valuation
This table compares Annaly Capital Management and ARMOUR Residential REIT's gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Annaly Capital Management | $3.79 billion | 3.36 | $-2,162,860,000.00 | $1.00 | 9.11 |
| ARMOUR Residential REIT | $439.57 million | 1.99 | $-249,900,000.00 | $2.27 | 5.41 |
ARMOUR Residential REIT has lower revenue, but higher earnings than Annaly Capital Management. ARMOUR Residential 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.
Risk & Volatility
Annaly Capital Management has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500.
Analyst Ratings
This is a summary of recent recommendations and price targets for Annaly Capital Management and ARMOUR Residential REIT, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Annaly Capital Management | 0 | 1 | 6 | 0 | 2.86 |
| ARMOUR Residential REIT | 0 | 2 | 1 | 0 | 2.33 |
Annaly Capital Management currently has a consensus price target of $8.6786, indicating a potential downside of 4.74%. ARMOUR Residential REIT has a consensus price target of $11.25, indicating a potential downside of 8.31%. Given Annaly Capital Management's stronger consensus rating and higher possible upside, equities research analysts plainly believe Annaly Capital Management is more favorable than ARMOUR Residential REIT.
Dividends
Annaly Capital Management pays an annual dividend of $0.88 per share and has a dividend yield of 9.7%. ARMOUR Residential REIT pays an annual dividend of $1.20 per share and has a dividend yield of 9.8%. Annaly Capital Management pays out 88.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ARMOUR Residential REIT pays out 52.9% of its earnings in the form of a dividend. Annaly Capital Management has increased its dividend for 1 consecutive years and ARMOUR Residential REIT has increased its dividend for 1 consecutive years. ARMOUR Residential REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional & Insider Ownership
44.6% of Annaly Capital Management shares are owned by institutional investors. Comparatively, 54.3% of ARMOUR Residential REIT shares are owned by institutional investors. 0.4% of Annaly Capital Management shares are owned by company insiders. Comparatively, 1.3% of ARMOUR Residential REIT shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Summary
Annaly Capital Management beats ARMOUR Residential REIT on 9 of the 16 factors compared between the two stocks.
