AG Mortgage Investment (NYSE: MITT) and Dynex Capital (NYSE:DX) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Risk & Volatility

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AG Mortgage Investment has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500. Comparatively, Dynex Capital has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500.

Profitability

This table compares AG Mortgage Investment and Dynex Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AG Mortgage Investment 92.01% 11.23% 1.81%
Dynex Capital 35.86% 11.04% 1.33%

Insider and Institutional Ownership

65.1% of AG Mortgage Investment shares are held by institutional investors. Comparatively, 52.7% of Dynex Capital shares are held by institutional investors. 1.6% of AG Mortgage Investment shares are held by insiders. Comparatively, 7.1% of Dynex Capital 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.

Valuation and Earnings

This table compares AG Mortgage Investment and Dynex Capital’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AG Mortgage Investment $128.85 million 3.81 $118.55 million $3.76 4.64
Dynex Capital $94.50 million 3.81 $33.89 million $0.44 14.66

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for AG Mortgage Investment and Dynex Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AG Mortgage Investment 0 3 0 0 2.00
Dynex Capital 0 1 1 0 2.50

AG Mortgage Investment presently has a consensus target price of $18.25, suggesting a potential upside of 4.70%. Dynex Capital has a consensus target price of $7.25, suggesting a potential upside of 12.40%. Given Dynex Capital’s stronger consensus rating and higher probable upside, analysts clearly believe Dynex Capital is more favorable than AG Mortgage Investment.

Dividends

AG Mortgage Investment pays an annual dividend of $1.90 per share and has a dividend yield of 10.9%. Dynex Capital pays an annual dividend of $0.72 per share and has a dividend yield of 11.2%. AG Mortgage Investment pays out 50.5% of its earnings in the form of a dividend. Dynex Capital pays out 163.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

AG Mortgage Investment beats Dynex Capital on 10 of the 16 factors compared between the two stocks.

AG Mortgage Investment Company Profile

AG Mortgage Investment Trust, Inc., a real estate investment trust, focuses on investing in, acquiring, and managing a portfolio of residential mortgage assets, other real estate-related securities, and financial assets. The company invests in residential mortgage-backed securities (RMBS) issued or guaranteed by a U.S. government agency or U.S. government-sponsored entities; and fixed- and floating-rate residential non-agency RMBS that are not issued by a U.S. government agencies or U.S. government-sponsored entities. The company also invests in other real estate-related assets and financial assets, including fixed- and floating-rate commercial mortgage-backed securities, such as investment grade and non-investment grade classes; residential mortgage loans secured by residential real property; and commercial mortgage loans secured by commercial real property comprising mezzanine loans and preferred equity. In addition, its other real estate-related assets and financial assets investments include first or second lien loans, subordinate interests in first mortgages, and mezzanine financing secured by interests in commercial real estate, as well as bridge loans to be used in the acquisition, construction, or redevelopment of a property; other real estate structured finance products, mortgage servicing rights, real estate-related loans and securities, and other financial assets; and investment grade and non-investment grade debt and equity tranches of securitizations backed by various asset classes, such as small balance commercial mortgages, aircraft, automobiles, credit cards, equipment, manufactured housing, franchises, recreational vehicles, and student loans. 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 2011 and is based in New York, New York.

Dynex Capital Company Profile

Dynex Capital, Inc. is an internally managed mortgage real estate investment trust, which invests in residential and commercial mortgage securities on a leveraged basis. The Company’s objective is to provide attractive risk-adjusted returns to its shareholders over the long term that is reflective of a leveraged fixed income portfolio with a focus on capital preservation. It seeks to provide returns to its shareholders through regular quarterly dividends and through capital appreciation. It invests in Agency and non-Agency mortgage-backed securities (MBS). MBS consists of residential MBS (RMBS), commercial MBS (CMBS) and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the United States Government or a government-sponsored entity (GSE), such as Fannie Mae and Freddie Mac.

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