Chimera Investment (NYSE: CIM) and Capital Trust (NYSE:BXMT) are both mid-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.

Earnings & Valuation

This table compares Chimera Investment and Capital Trust’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Chimera Investment $934.07 million 3.85 $551.94 million $3.26 5.87
Capital Trust $313.70 million 11.03 $238.29 million $2.25 14.56

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

Profitability

This table compares Chimera Investment and Capital Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chimera Investment 58.21% 13.29% 2.33%
Capital Trust 53.85% 8.63% 2.32%

Dividends

Chimera Investment pays an annual dividend of $2.00 per share and has a dividend yield of 10.4%. Capital Trust pays an annual dividend of $2.48 per share and has a dividend yield of 7.6%. Chimera Investment pays out 61.3% of its earnings in the form of a dividend. Capital Trust pays out 110.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chimera Investment has raised its dividend for 3 consecutive years and Capital Trust has raised its dividend for 2 consecutive years. Chimera Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Chimera Investment has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, Capital Trust has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Institutional & Insider Ownership

50.7% of Chimera Investment shares are held by institutional investors. Comparatively, 54.2% of Capital Trust shares are held by institutional investors. 0.7% of Chimera Investment shares are held by insiders. Comparatively, 0.9% of Capital Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Chimera Investment and Capital Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chimera Investment 0 4 0 0 2.00
Capital Trust 0 3 4 0 2.57

Chimera Investment currently has a consensus target price of $18.83, indicating a potential downside of 1.65%. Capital Trust has a consensus target price of $33.25, indicating a potential upside of 1.46%. Given Capital Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Capital Trust is more favorable than Chimera Investment.

Summary

Chimera Investment beats Capital Trust on 10 of the 17 factors compared between the two stocks.

About Chimera Investment

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.

About Capital Trust

Blackstone Mortgage Trust, Inc. is a holding company. The Company conducts its operations as a real estate investment trust for the United States federal income tax purposes. The Company originates and purchases senior loans collateralized by properties in North America and Europe. The Company’s business is focused on originating or acquiring senior, floating rate mortgage loans that are secured by a first priority mortgage on commercial real estate assets primarily in the office, lodging, retail, residential and industrial sectors. These investments may be in the form of whole loans or may also include pari passu participations within mortgage loans. It directly originates, co-originates and acquires debt instruments in conjunction with acquisitions, refinancings and recapitalizations of commercial real estate. The Company’s manager is BXMT Advisors L.L.C.

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