Uniti Group (NASDAQ:UNIT) and MFA Finl Inc/SH (NYSE:MFA) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitability.

Risk & Volatility

Uniti Group has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, MFA Finl Inc/SH has a beta of 0.32, suggesting that its share price is 68% less volatile than the S&P 500.

Institutional & Insider Ownership

71.1% of Uniti Group shares are held by institutional investors. Comparatively, 78.3% of MFA Finl Inc/SH shares are held by institutional investors. 0.4% of Uniti Group shares are held by company insiders. Comparatively, 0.7% of MFA Finl Inc/SH shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Uniti Group pays an annual dividend of $2.40 per share and has a dividend yield of 12.1%. MFA Finl Inc/SH pays an annual dividend of $0.80 per share and has a dividend yield of 11.4%. Uniti Group pays out 95.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MFA Finl Inc/SH pays out 101.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Uniti Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Uniti Group and MFA Finl Inc/SH, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Uniti Group 1 2 2 0 2.20
MFA Finl Inc/SH 0 5 1 0 2.17

Uniti Group presently has a consensus target price of $25.80, indicating a potential upside of 30.17%. MFA Finl Inc/SH has a consensus target price of $8.33, indicating a potential upside of 18.54%. Given Uniti Group’s stronger consensus rating and higher probable upside, analysts plainly believe Uniti Group is more favorable than MFA Finl Inc/SH.

Profitability

This table compares Uniti Group and MFA Finl Inc/SH’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Uniti Group 1.83% -1.45% 0.41%
MFA Finl Inc/SH 77.32% 9.82% 2.94%

Valuation & Earnings

This table compares Uniti Group and MFA Finl Inc/SH’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Uniti Group $916.03 million 3.80 -$9.43 million $2.51 7.90
MFA Finl Inc/SH $433.45 million 6.46 $322.39 million $0.79 8.90

MFA Finl Inc/SH has lower revenue, but higher earnings than Uniti Group. Uniti Group is trading at a lower price-to-earnings ratio than MFA Finl Inc/SH, indicating that it is currently the more affordable of the two stocks.

Uniti Group Company Profile

Uniti, an internally managed real estate investment trust, is engaged in the acquisition and construction of mission critical communications infrastructure, and is a leading provider of wireless infrastructure solutions for the communications industry. As of June 30, 2018, Uniti owns 5.4 million fiber strand miles, approximately 770 wireless towers, and other communications real estate throughout the United States and Latin America.

MFA Finl Inc/SH Company Profile

MFA Financial, Inc., through its subsidiaries, operates as a real estate investment trust (REIT) in the United States. The company invests in residential mortgage assets, including non-agency mortgage-backed securities (MBS), agency MBS, residential whole loans, credit risk transfer securities, and mortgage servicing rights related assets. Its MBS are secured by hybrid, adjustable-rate, 15-year fixed-rate, and 30-year and longer-term fixed-rate mortgages, as well as mortgages that have interest rates that reset more frequently. The company has elected to be taxed as a REIT and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. MFA Financial, Inc. was founded in 1997 and is headquartered in New York, New York.

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