Adamas Trust (NASDAQ:ADAM) versus MFA Financial (NYSE:MFA) Financial Analysis

MFA Financial (NYSE:MFA) and Adamas Trust (NASDAQ:ADAM) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Analyst Ratings

This is a summary of current ratings for MFA Financial and Adamas Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MFA Financial	0	3	4	0	2.57
Adamas Trust	0	4	1	1	2.50

MFA Financial presently has a consensus price target of $10.46, indicating a potential upside of 17.77%. Adamas Trust has a consensus price target of $9.50, indicating a potential downside of 2.06%. Given MFA Financial’s stronger consensus rating and higher probable upside, equities analysts plainly believe MFA Financial is more favorable than Adamas Trust.

Insider and Institutional Ownership

65.3% of MFA Financial shares are owned by institutional investors. Comparatively, 54.9% of Adamas Trust shares are owned by institutional investors. 1.0% of MFA Financial shares are owned by company insiders. Comparatively, 2.0% of Adamas Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares MFA Financial and Adamas Trust”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MFA Financial	$745.06 million	1.20	$176.78 million	$1.00	8.88
Adamas Trust	$601.95 million	1.45	$149.05 million	$1.68	5.77

MFA Financial has higher revenue and earnings than Adamas Trust. Adamas Trust is trading at a lower price-to-earnings ratio than MFA Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares MFA Financial and Adamas Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MFA Financial	19.38%	7.58%	1.05%
Adamas Trust	29.82%	14.72%	1.04%

Dividends

MFA Financial pays an annual dividend of $1.44 per share and has a dividend yield of 16.2%. Adamas Trust pays an annual dividend of $1.08 per share and has a dividend yield of 11.1%. MFA Financial pays out 144.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Adamas Trust pays out 64.3% of its earnings in the form of a dividend. MFA Financial has raised its dividend for 1 consecutive years. MFA Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

MFA Financial has a beta of 1.41, suggesting that its share price is 41% more volatile than the S&P 500. Comparatively, Adamas Trust has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500.

Summary

MFA Financial beats Adamas Trust on 11 of the 18 factors compared between the two stocks.

About MFA Financial

MFA Financial, Inc., together with its subsidiaries, operates as a real estate investment trust in the United States. It invests in residential mortgage securities, including non-agency mortgage-backed securities, agency MBS, and credit risk transfer securities; residential whole loans, including purchased performing loans, purchased credit deteriorated, and non-performing loans; and mortgage servicing rights related assets. The company was incorporated in 1997 and is based in New York, New York.

About Adamas Trust

New York Mortgage Trust, Inc. acquires, invests in, finances, and manages mortgage-related single-family and multi-family residential assets in the United States. Its targeted investments include residential loans, second mortgages, and business purpose loans; structured multi-family property investments, such as preferred equity in, and mezzanine loans to owners of multi-family properties, as well as joint venture equity investments in multi-family properties; non-agency residential mortgage-backed securities (RMBS); agency RMBS; commercial mortgage-backed securities (CMBS); and other mortgage, residential housing, and credit-related assets. 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 incorporated in 2003 and is headquartered in New York, New York.