Critical Analysis: Ladder Capital Corp (LADR) versus Chimera Investment Corporation (CIM)
Ladder Capital Corp (NYSE: LADR) and Chimera Investment Corporation (NYSE:CIM) are both mortgage reits companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.
Institutional and Insider Ownership
50.8% of Chimera Investment Corporation shares are owned by institutional investors. 0.7% of Chimera Investment Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
This table compares Ladder Capital Corp and Chimera Investment Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ladder Capital Corp||27.24%||8.57%||1.93%|
|Chimera Investment Corporation||58.21%||13.29%||2.33%|
Ladder Capital Corp pays an annual dividend of $1.20 per share and has a dividend yield of 8.8%. Chimera Investment Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 10.9%. Ladder Capital Corp pays out 137.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chimera Investment Corporation pays out 61.5% of its earnings in the form of a dividend. Ladder Capital Corp has increased its dividend for 2 consecutive years. Chimera Investment Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of recent ratings and recommmendations for Ladder Capital Corp and Chimera Investment Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ladder Capital Corp||0||1||5||0||2.83|
|Chimera Investment Corporation||0||4||0||0||2.00|
Ladder Capital Corp currently has a consensus price target of $16.25, indicating a potential upside of 18.61%. Chimera Investment Corporation has a consensus price target of $18.83, indicating a potential upside of 2.91%. Given Ladder Capital Corp’s stronger consensus rating and higher probable upside, analysts plainly believe Ladder Capital Corp is more favorable than Chimera Investment Corporation.
Volatility & Risk
Ladder Capital Corp has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, Chimera Investment Corporation has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500.
Valuation and Earnings
This table compares Ladder Capital Corp and Chimera Investment Corporation’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Ladder Capital Corp||N/A||N/A||N/A||$0.87||15.75|
|Chimera Investment Corporation||$934.07 million||3.68||$551.94 million||$3.25||5.63|
Chimera Investment Corporation has higher revenue and earnings than Ladder Capital Corp. Chimera Investment Corporation is trading at a lower price-to-earnings ratio than Ladder Capital Corp, indicating that it is currently the more affordable of the two stocks.
Chimera Investment Corporation beats Ladder Capital Corp on 9 of the 14 factors compared between the two stocks.
Ladder Capital Corp Company Profile
Ladder Capital Corp is a commercial real estate finance company. The Company’s segments include loans, securities, real estate and corporate/other. The loans segment includes mortgage loan receivables held for investment (balance sheet loans) and mortgage loan receivables held for sale (conduit loans). The securities segment consists of all of its activities related to commercial real estate securities, which include investments in commercial mortgage-backed securities (CMBS) and United States Agency Securities. The real estate segment includes net leased properties, office buildings, a warehouse and condominium units. The Corporate/other segment includes the Company’s investments in joint ventures, other asset management activities and operating expenses. The Company invests primarily in loans, securities and other interests in the United States commercial real estate, with a focus on senior secured assets.
Chimera Investment Corporation Company Profile
Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.
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