Financial Analysis: Sunrise Realty Trust (NASDAQ:SUNS) vs. Two Harbors Investments (NYSE:TWO)

Two Harbors Investments (NYSE:TWO) and Sunrise Realty Trust (NASDAQ:SUNS) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, institutional ownership, risk, earnings, analyst recommendations, dividends and profitability.

Earnings & Valuation

This table compares Two Harbors Investments and Sunrise Realty Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Two Harbors Investments	$366.65 million	3.44	-$454.30 million	($0.74)	-16.20
Sunrise Realty Trust	$21.57 million	4.69	$12.14 million	$0.97	7.72

Sunrise Realty Trust has lower revenue, but higher earnings than Two Harbors Investments. Two Harbors Investments is trading at a lower price-to-earnings ratio than Sunrise Realty Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings for Two Harbors Investments and Sunrise Realty Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Two Harbors Investments	1	5	0	1	2.14
Sunrise Realty Trust	1	2	0	0	1.67

Two Harbors Investments currently has a consensus price target of $12.75, indicating a potential upside of 6.38%. Sunrise Realty Trust has a consensus price target of $8.00, indicating a potential upside of 6.81%. Given Sunrise Realty Trust’s higher probable upside, analysts plainly believe Sunrise Realty Trust is more favorable than Two Harbors Investments.

Insider & Institutional Ownership

64.2% of Two Harbors Investments shares are owned by institutional investors. 0.7% of Two Harbors Investments shares are owned by insiders. Comparatively, 28.5% of Sunrise Realty Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Two Harbors Investments and Sunrise Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Two Harbors Investments	-6.09%	12.79%	1.44%
Sunrise Realty Trust	53.33%	8.24%	5.03%

Dividends

Two Harbors Investments pays an annual dividend of $0.48 per share and has a dividend yield of 4.0%. Sunrise Realty Trust pays an annual dividend of $1.20 per share and has a dividend yield of 16.0%. Two Harbors Investments pays out -64.9% of its earnings in the form of a dividend. Sunrise Realty Trust pays out 123.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Two Harbors Investments has raised its dividend for 1 consecutive years.

Volatility and Risk

Two Harbors Investments has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500. Comparatively, Sunrise Realty Trust has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.

Summary

Sunrise Realty Trust beats Two Harbors Investments on 9 of the 17 factors compared between the two stocks.

About Two Harbors Investments

Two Harbors Investment Corp. invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through RoundPoint in the United States. The company target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, hybrid mortgage loans, or derivatives; and other assets, such as financial and mortgage-related assets, including non-agency securities and non-hedging transactions. It qualifies as a REIT for federal income tax purposes. As a REIT, the company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in St. Louis Park, Minnesota.

About Sunrise Realty Trust

Sunrise Realty Trust, Inc. engages in commercial real estate (CRE) lending business. It focuses on originating CRE debt investments and providing capital to borrowers and sponsors with transitional business plans collateralized by CRE assets. The company intends to create a diversified investment portfolio, targeting investments in senior mortgage loans, mezzanine loans, whole loans, B-notes, CMBS, and debt-like preferred equity securities across CRE asset classes. Sunrise Realty Trust, Inc. was incorporated in 2023 and is based in West Palm Beach, Florida.