Head to Head Review: AFC Gamma (NASDAQ:AFCG) & Chimera Investment (NYSE:CIM)

AFC Gamma (NASDAQ:AFCG) and Chimera Investment (NYSE:CIM) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, valuation, institutional ownership and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
AFC Gamma	-43.21%	1.48%	0.85%
Chimera Investment	2.27%	9.36%	1.55%

Volatility and Risk

AFC Gamma has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Chimera Investment has a beta of 1.68, meaning that its share price is 68% more volatile than the S&P 500.

Dividends

AFC Gamma pays an annual dividend of $0.20 per share and has a dividend yield of 5.7%. Chimera Investment pays an annual dividend of $1.80 per share and has a dividend yield of 13.7%. AFC Gamma pays out -31.3% of its earnings in the form of a dividend. Chimera Investment pays out -225.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Chimera Investment has increased its dividend for 1 consecutive years. Chimera Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares AFC Gamma and Chimera Investment”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AFC Gamma	$31.32 million	2.63	-$20.67 million	($0.64)	-5.47
Chimera Investment	$821.34 million	1.34	$230.50 million	($0.80)	-16.44

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

Institutional & Insider Ownership

26.5% of AFC Gamma shares are held by institutional investors. Comparatively, 48.4% of Chimera Investment shares are held by institutional investors. 30.7% of AFC Gamma shares are held by company insiders. Comparatively, 1.8% of Chimera Investment shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for AFC Gamma and Chimera Investment, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AFC Gamma	1	2	0	0	1.67
Chimera Investment	1	2	1	0	2.00

AFC Gamma presently has a consensus price target of $4.50, indicating a potential upside of 28.57%. Chimera Investment has a consensus price target of $14.83, indicating a potential upside of 12.78%. Given AFC Gamma’s higher possible upside, analysts clearly believe AFC Gamma is more favorable than Chimera Investment.

Summary

Chimera Investment beats AFC Gamma on 12 of the 17 factors compared between the two stocks.

About AFC Gamma

AFC Gamma, Inc. originates, structures, underwrites, and invests in senior secured loans, and other various commercial real estate loans and debt securities for established companies operating in the cannabis industry. It primarily originates loans structured as senior loans secured by real estate, equipment, and licenses and/or other assets of the loan parties to the extent permitted by applicable laws and the regulations governing such loan parties. The company has elected and qualified to be taxed as a real estate investment trust for the United States federal income tax purposes under the Internal Revenue Code of 1986. AFC Gamma, Inc. was incorporated in 2020 and is based in West Palm Beach, Florida.

About Chimera Investment

Chimera Investment Corporation operates as a real estate investment trust (REIT) in the United States. The company, through its subsidiaries, invests in a portfolio of mortgage assets, including residential mortgage loans, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, agency mortgage-backed securities secured by pools of commercial mortgage loans, business purpose and investor loans, and other real estate related securities. It invests in investment grade, non-investment grade, and non-rated classes. The company qualifies as a real estate investment trust (REIT) for federal income tax purposes. As a REIT, it intends to distribute at least 90% of its taxable income as dividends to shareholders. Chimera Investment Corporation was incorporated in 2007 and is headquartered in New York, New York.