Critical Analysis: Western Asset Mortgage Capital Corporation (WMC) vs. Granite Point Mortgage Trust (GPMT)
Granite Point Mortgage Trust (NASDAQ: GPMT) and Western Asset Mortgage Capital Corporation (NYSE:WMC) are both small-cap financials companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.
Valuation & Earnings
This table compares Granite Point Mortgage Trust and Western Asset Mortgage Capital Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Granite Point Mortgage Trust||N/A||N/A||N/A||$1.14||15.43|
|Western Asset Mortgage Capital Corporation||$91.33 million||4.48||-$25.01 million||$0.82||11.91|
Granite Point Mortgage Trust has higher revenue, but lower earnings than Western Asset Mortgage Capital Corporation. Western Asset Mortgage Capital Corporation is trading at a lower price-to-earnings ratio than Granite Point Mortgage Trust, indicating that it is currently the more affordable of the two stocks.
This table compares Granite Point Mortgage Trust and Western Asset Mortgage Capital Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Granite Point Mortgage Trust||54.39%||8.94%||3.09%|
|Western Asset Mortgage Capital Corporation||27.34%||5.97%||0.83%|
Western Asset Mortgage Capital Corporation pays an annual dividend of $1.24 per share and has a dividend yield of 12.7%. Granite Point Mortgage Trust does not pay a dividend. Western Asset Mortgage Capital Corporation pays out 151.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This is a breakdown of recent ratings and target prices for Granite Point Mortgage Trust and Western Asset Mortgage Capital Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Granite Point Mortgage Trust||0||2||3||0||2.60|
|Western Asset Mortgage Capital Corporation||0||2||0||0||2.00|
Granite Point Mortgage Trust presently has a consensus price target of $19.88, indicating a potential upside of 12.96%. Western Asset Mortgage Capital Corporation has a consensus price target of $10.00, indicating a potential upside of 2.35%. Given Granite Point Mortgage Trust’s stronger consensus rating and higher possible upside, equities analysts plainly believe Granite Point Mortgage Trust is more favorable than Western Asset Mortgage Capital Corporation.
Insider & Institutional Ownership
40.0% of Western Asset Mortgage Capital Corporation shares are owned by institutional investors. 0.4% of Western Asset Mortgage Capital Corporation shares are owned by company 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.
Granite Point Mortgage Trust beats Western Asset Mortgage Capital Corporation on 8 of the 12 factors compared between the two stocks.
Granite Point Mortgage Trust Company Profile
Granite Point Mortgage Trust Inc. is focused primarily on directly originating, investing in and managing senior floating-rate commercial mortgage loans and other debt, such as commercial real estate investments. The Company formed to continue and expand the commercial real estate lending business. The Company is a long-term, fundamental value-oriented investor. The Company constructs its own investment portfolio on a loan-by-loan basis, emphasizing rigorous credit underwriting, selectivity and diversification available in the market. The Company provides intermediate-term bridge or transitional financing for a variety of purposes, including acquisitions, recapitalizations, refinancing and a range of business plans including lease-up, renovation, repositioning and repurposing of the property. It generally targets the top 25-50, metropolitan statistical areas (MSA) in the United States.
Western Asset Mortgage Capital Corporation Company Profile
Western Asset Mortgage Capital Corporation is a real estate investment trust. The Company is focused on investing in, financing and managing a diversified portfolio of real estate-related securities, whole-loans and other financial assets. The Company’s portfolio includes Agency residential mortgage-backed securities (RMBS), including Mortgage pass-through certificates, Agency derivatives, Agency Interest-Only Strips and Agency collateralized mortgage obligations (CMOs); Non-Agency RMBS, and Agency commercial mortgage-backed securities (CMBS), Non-Agency CMBS, Non United States CMBS and asset-backed securities (ABS), as well as Residential and Commercial Whole-Loans. The Company may utilize to-be-announced forward contracts (TBAs), in order to invest in Agency RMBS. The Company’s manager is Western Asset Management Company.
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