Financial Comparison: Adamas Trust (NASDAQ:ADAM) & ARMOUR Residential REIT (NYSE:ARR)

ARMOUR Residential REIT (NYSE:ARR) and Adamas Trust (NASDAQ:ADAM) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Analyst Recommendations

This is a breakdown of current ratings and price targets for ARMOUR Residential REIT and Adamas Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARMOUR Residential REIT	1	2	2	0	2.20
Adamas Trust	0	4	1	1	2.50

ARMOUR Residential REIT presently has a consensus target price of $18.50, indicating a potential upside of 14.74%. Adamas Trust has a consensus target price of $9.50, indicating a potential downside of 1.61%. Given ARMOUR Residential REIT’s higher possible upside, analysts plainly believe ARMOUR Residential REIT is more favorable than Adamas Trust.

Valuation & Earnings

This table compares ARMOUR Residential REIT and Adamas Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARMOUR Residential REIT	$800.42 million	2.85	$322.69 million	$3.72	4.33
Adamas Trust	$601.95 million	1.44	$149.05 million	$1.68	5.75

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

Risk and Volatility

ARMOUR Residential REIT has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500. Comparatively, Adamas Trust has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500.

Institutional & Insider Ownership

54.2% of ARMOUR Residential REIT shares are held by institutional investors. Comparatively, 54.9% of Adamas Trust shares are held by institutional investors. 0.2% of ARMOUR Residential REIT shares are held by insiders. Comparatively, 2.0% of Adamas Trust shares are held 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.

Dividends

ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 17.9%. Adamas Trust pays an annual dividend of $1.08 per share and has a dividend yield of 11.2%. ARMOUR Residential REIT pays out 77.4% 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.

Profitability

This table compares ARMOUR Residential REIT and Adamas Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARMOUR Residential REIT	44.90%	15.10%	1.66%
Adamas Trust	29.82%	14.72%	1.04%

Summary

ARMOUR Residential REIT beats Adamas Trust on 11 of the 17 factors compared between the two stocks.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. Its securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans; and unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.

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.