Capstead Mortgage (NYSE:CMO) and Annaly Capital Management (NYSE:NLY) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.
Dividends
Capstead Mortgage pays an annual dividend of $0.60 per share and has a dividend yield of 9.3%. Annaly Capital Management pays an annual dividend of $0.88 per share and has a dividend yield of 9.6%. Capstead Mortgage pays out 120.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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. Capstead Mortgage has raised its dividend for 1 consecutive years and Annaly Capital Management has raised its dividend for 1 consecutive years. Annaly Capital Management is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares Capstead Mortgage and Annaly Capital Management's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Capstead Mortgage | -52.33% | 11.77% | 0.84% |
| Annaly Capital Management | -20.12% | 13.27% | 1.57% |
Risk and Volatility
Capstead Mortgage has a beta of 1.39, suggesting that its stock price is 39% more volatile than the S&P 500. Comparatively, Annaly Capital Management has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500.
Analyst Ratings
This is a summary of current recommendations for Capstead Mortgage and Annaly Capital Management, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Capstead Mortgage | 0 | 0 | 0 | 0 | N/A |
| Annaly Capital Management | 0 | 1 | 6 | 0 | 2.86 |
Annaly Capital Management has a consensus target price of $8.6786, indicating a potential downside of 5.15%. Given Annaly Capital Management's higher possible upside, analysts clearly believe Annaly Capital Management is more favorable than Capstead Mortgage.
Institutional and Insider Ownership
77.6% of Capstead Mortgage shares are owned by institutional investors. Comparatively, 44.6% of Annaly Capital Management shares are owned by institutional investors. 1.9% of Capstead Mortgage shares are owned by insiders. Comparatively, 0.4% of Annaly Capital Management shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Valuation & Earnings
This table compares Capstead Mortgage and Annaly Capital Management's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Capstead Mortgage | $322.97 million | 1.94 | $-35,340,000.00 | $0.50 | 12.96 |
| Annaly Capital Management | $3.79 billion | 3.38 | $-2,162,860,000.00 | $1.00 | 9.15 |
Capstead Mortgage has higher earnings, but lower revenue than Annaly Capital Management. Annaly Capital Management is trading at a lower price-to-earnings ratio than Capstead Mortgage, indicating that it is currently the more affordable of the two stocks.
Summary
Annaly Capital Management beats Capstead Mortgage on 10 of the 15 factors compared between the two stocks.
