Financial Review: BrightSpire Capital (NYSE:BRSP) & Annaly Capital Management (NYSE:NLY)

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

Dividends

BrightSpire Capital pays an annual dividend of $0.64 per share and has a dividend yield of 11.5%. Annaly Capital Management pays an annual dividend of $2.80 per share and has a dividend yield of 12.9%. BrightSpire Capital pays out -237.0% of its earnings in the form of a dividend. Annaly Capital Management pays out 94.6% 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. Annaly Capital Management is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

56.6% of BrightSpire Capital shares are owned by institutional investors. Comparatively, 51.6% of Annaly Capital Management shares are owned by institutional investors. 2.8% of BrightSpire Capital shares are owned by company insiders. Comparatively, 0.2% of Annaly Capital Management shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares BrightSpire Capital and Annaly Capital Management”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BrightSpire Capital	$194.89 million	3.72	-$31.15 million	($0.27)	-20.61
Annaly Capital Management	$5.96 billion	2.67	$2.03 billion	$2.96	7.32

Annaly Capital Management has higher revenue and earnings than BrightSpire Capital. BrightSpire Capital 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.

Volatility and Risk

BrightSpire Capital has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500. Comparatively, Annaly Capital Management has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500.

Profitability

This table compares BrightSpire Capital and Annaly Capital Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BrightSpire Capital	-24.16%	7.46%	2.03%
Annaly Capital Management	34.33%	15.92%	1.68%

Analyst Recommendations

This is a summary of recent recommendations for BrightSpire Capital and Annaly Capital Management, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BrightSpire Capital	2	0	4	0	2.33
Annaly Capital Management	0	4	7	1	2.75

BrightSpire Capital currently has a consensus price target of $6.75, indicating a potential upside of 21.29%. Annaly Capital Management has a consensus price target of $24.22, indicating a potential upside of 11.75%. Given BrightSpire Capital’s higher possible upside, research analysts plainly believe BrightSpire Capital is more favorable than Annaly Capital Management.

Summary

Annaly Capital Management beats BrightSpire Capital on 11 of the 18 factors compared between the two stocks.

About BrightSpire Capital

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States and Europe. The company operates through Senior and Mezzanine Loans and Preferred Equity; Net Leased and Other Real Estate; and Corporate and Other segments. It focuses on originating, acquiring, financing, and managing a diversified portfolio of CRE debt investments consisting of first mortgage loans, senior loans, debt securities, mezzanine loans, and preferred equity investments, as well as net leased properties. 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 formerly known as Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.

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.