Capstead Mortgage Corporation (NYSE: CMO) and Ladder Capital Corp (NASDAQ:LADR) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitabiliy and analyst recommendations.

Dividends

Capstead Mortgage Corporation pays an annual dividend of $0.84 per share and has a dividend yield of 7.6%. Ladder Capital Corp does not pay a dividend. Capstead Mortgage Corporation pays out 127.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ladder Capital Corp has increased its dividend for 3 consecutive years.

Institutional & Insider Ownership

72.3% of Capstead Mortgage Corporation shares are held by institutional investors. 1.7% of Capstead Mortgage Corporation shares are held 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.

Profitability

This table compares Capstead Mortgage Corporation and Ladder Capital Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capstead Mortgage Corporation 37.49% 7.61% 0.59%
Ladder Capital Corp 22.29% 5.35% 1.37%

Valuation & Earnings

This table compares Capstead Mortgage Corporation and Ladder Capital Corp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Capstead Mortgage Corporation $92.44 million 11.51 $63.40 million $0.66 16.79
Ladder Capital Corp $312.28 million 3.59 N/A N/A N/A

Capstead Mortgage Corporation has higher revenue, but lower earnings than Ladder Capital Corp.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Capstead Mortgage Corporation and Ladder Capital Corp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capstead Mortgage Corporation 0 2 0 0 2.00
Ladder Capital Corp 0 2 5 0 2.71

Capstead Mortgage Corporation currently has a consensus target price of $11.00, indicating a potential downside of 0.72%. Ladder Capital Corp has a consensus target price of $15.00, indicating a potential upside of 6.53%. Given Ladder Capital Corp’s stronger consensus rating and higher probable upside, analysts clearly believe Ladder Capital Corp is more favorable than Capstead Mortgage Corporation.

Capstead Mortgage Corporation Company Profile

Capstead Mortgage Corporation operates as a self-managed real estate investment trust (REIT). The Company manages a leveraged portfolio of residential mortgage pass-through securities consisting of relatively short-duration adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac), or by an agency of the federal government, the Government National Mortgage Association (Ginnie Mae). The Company finances its residential mortgage investments by leveraging its long-term investment capital with secured borrowings consisting primarily of borrowings under repurchase arrangements with commercial banks and other financial institutions. The Company’s portfolio of residential mortgage investments includes residential mortgage investments.

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.

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