Transcontinental Realty Investors (NYSE:TCI) and Western Asset Mortgage Capital (NYSE:WMC) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.

Institutional & Insider Ownership

2.3% of Transcontinental Realty Investors shares are owned by institutional investors. Comparatively, 46.4% of Western Asset Mortgage Capital shares are owned by institutional investors. 87.9% of Transcontinental Realty Investors shares are owned by insiders. Comparatively, 0.5% of Western Asset Mortgage Capital shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Western Asset Mortgage Capital pays an annual dividend of $1.24 per share and has a dividend yield of 12.0%. Transcontinental Realty Investors does not pay a dividend. Western Asset Mortgage Capital pays out 91.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Transcontinental Realty Investors and Western Asset Mortgage Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Transcontinental Realty Investors 219.31% -4.42% -1.91%
Western Asset Mortgage Capital 18.47% 11.66% 1.26%

Earnings & Valuation

This table compares Transcontinental Realty Investors and Western Asset Mortgage Capital’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Transcontinental Realty Investors $120.96 million 2.50 $181.45 million N/A N/A
Western Asset Mortgage Capital $209.36 million 2.63 $26.41 million $1.36 7.60

Transcontinental Realty Investors has higher earnings, but lower revenue than Western Asset Mortgage Capital.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Transcontinental Realty Investors and Western Asset Mortgage Capital, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Transcontinental Realty Investors 0 0 0 0 N/A
Western Asset Mortgage Capital 0 1 1 0 2.50

Western Asset Mortgage Capital has a consensus target price of $10.50, indicating a potential upside of 1.65%. Given Western Asset Mortgage Capital’s higher probable upside, analysts clearly believe Western Asset Mortgage Capital is more favorable than Transcontinental Realty Investors.

Volatility and Risk

Transcontinental Realty Investors has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500. Comparatively, Western Asset Mortgage Capital has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500.

Summary

Western Asset Mortgage Capital beats Transcontinental Realty Investors on 9 of the 13 factors compared between the two stocks.

About Transcontinental Realty Investors

Transcontinental Realty Investors, Inc., a Dallas-based real estate investment company, holds a diverse portfolio of equity real estate located across the U.S., including apartments, office buildings, shopping centers, and developed and undeveloped land. The Company invests in real estate through direct ownership, leases and partnerships and invests in mortgage loans on real estate. For more information, visit the Company's website at www.transconrealty-invest.com.

About Western Asset Mortgage Capital

Western Asset Mortgage Capital Corporation operates as a real estate investment trust in the United States. It focuses on investing in, financing, and managing a portfolio of agency and non-agency residential mortgage-backed securities and commercial mortgage-backed securities, residential whole-loans, residential bridge loans, securitized commercial loans, and other financial 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 founded in 2009 and is based in Pasadena, California.

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