Hatteras Financial Corp. (NYSE: HTS) and Manhattan Bridge Capital (NASDAQ:LOAN) are both financials companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.

Risk and Volatility

Hatteras Financial Corp. has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500. Comparatively, Manhattan Bridge Capital has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500.

Dividends

Hatteras Financial Corp. pays an annual dividend of $1.80 per share and has a dividend yield of 11.0%. Manhattan Bridge Capital pays an annual dividend of $0.41 per share and has a dividend yield of 7.4%. Hatteras Financial Corp. pays out 580.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Manhattan Bridge Capital pays out 107.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Hatteras Financial Corp. and Manhattan Bridge Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hatteras Financial Corp. N/A -16.93% -1.89%
Manhattan Bridge Capital 59.95% 13.39% 8.37%

Institutional & Insider Ownership

9.6% of Manhattan Bridge Capital shares are held by institutional investors. 32.3% of Manhattan Bridge Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Hatteras Financial Corp. and Manhattan Bridge Capital’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hatteras Financial Corp. N/A N/A N/A $0.31 52.55
Manhattan Bridge Capital $4.21 million 10.68 $3.08 million $0.38 14.61

Manhattan Bridge Capital has higher revenue and earnings than Hatteras Financial Corp.. Manhattan Bridge Capital is trading at a lower price-to-earnings ratio than Hatteras Financial Corp., indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Hatteras Financial Corp. and Manhattan Bridge Capital, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hatteras Financial Corp. 0 0 0 0 N/A
Manhattan Bridge Capital 0 0 1 0 3.00

Manhattan Bridge Capital has a consensus target price of $7.25, indicating a potential upside of 30.63%. Given Manhattan Bridge Capital’s higher probable upside, analysts clearly believe Manhattan Bridge Capital is more favorable than Hatteras Financial Corp..

Summary

Manhattan Bridge Capital beats Hatteras Financial Corp. on 11 of the 12 factors compared between the two stocks.

About Hatteras Financial Corp.

Hatteras Financial Corp. is an externally managed mortgage real estate investment trust (REIT) that invests in single-family residential mortgage real estate assets, such as mortgage-backed security (MBS), mortgage servicing right (MSR), residential mortgage loans and other financial assets. MBS are pass-through securities consisting of a pool of mortgage loans. Its primary business is owning and managing agency securities, with a primary focus on adjustable-rate mortgage securities. Its primary investment assets include Agency MBS; other agency issued securities, such as credit-risk transfer bonds; MSR; non-agency securities; residential mortgage loans, and other real estate related assets as permitted by its investment guidelines and REIT requirements. Its business operations consist of the Hatteras Financial Corp., Onslow Bay Financial LLC, First Winston Securities, Inc. and Wind River TRS LLC. It is externally managed and advised by its manager, Atlantic Capital Advisors LLC.

About Manhattan Bridge Capital

Manhattan Bridge Capital, Inc. (MBC) is a real estate finance company that specializes in originating, servicing and managing a portfolio of first mortgage loans. The Company offers short-term, secured, non-banking loans to real estate investors to fund their acquisition, renovation, rehabilitation or improvement of properties located in the New York metropolitan area. Its primary business objective is to grow its loan portfolio while protecting and preserving capital in a manner that provides for risk-adjusted returns to its shareholders over the long term through dividends. It intends to achieve this objective by continuing to selectively originate, fund loans secured by first mortgages on residential real estate held for investment located in the New York metropolitan area, and to manage and service its portfolio in a manner designed to generate risk-adjusted returns across a range of market conditions and economic cycles. Its loan portfolio includes various construction loans.

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