Annaly Capital Management (NYSE: NLY) and AGNC Investment (NASDAQ:AGNC) are both mid-cap financials companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, dividends, valuation and analyst recommendations.

Analyst Recommendations

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This is a summary of recent recommendations for Annaly Capital Management and AGNC Investment, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Annaly Capital Management 0 2 2 0 2.50
AGNC Investment 0 3 2 0 2.40

Annaly Capital Management currently has a consensus price target of $11.63, indicating a potential upside of 10.71%. AGNC Investment has a consensus price target of $19.45, indicating a potential upside of 1.35%. Given Annaly Capital Management’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Annaly Capital Management is more favorable than AGNC Investment.

Valuation and Earnings

This table compares Annaly Capital Management and AGNC Investment’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Annaly Capital Management $2.21 billion 5.51 $1.43 billion $2.50 4.20
AGNC Investment $927.00 million 8.10 $623.00 million $4.06 4.73

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

Insider and Institutional Ownership

54.5% of Annaly Capital Management shares are owned by institutional investors. Comparatively, 64.7% of AGNC Investment shares are owned by institutional investors. 0.4% of Annaly Capital Management shares are owned by company insiders. Comparatively, 0.5% of AGNC Investment shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Annaly Capital Management pays an annual dividend of $1.20 per share and has a dividend yield of 11.4%. AGNC Investment pays an annual dividend of $2.16 per share and has a dividend yield of 11.3%. Annaly Capital Management pays out 48.0% of its earnings in the form of a dividend. AGNC Investment pays out 53.2% 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. Annaly Capital Management is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Annaly Capital Management and AGNC Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Annaly Capital Management 104.56% 11.59% 1.52%
AGNC Investment 145.02% 12.00% 1.51%

Volatility and Risk

Annaly Capital Management has a beta of 0.22, indicating that its stock price is 78% less volatile than the S&P 500. Comparatively, AGNC Investment has a beta of 0.13, indicating that its stock price is 87% less volatile than the S&P 500.

Summary

Annaly Capital Management beats AGNC Investment on 8 of the 15 factors compared between the two stocks.

Annaly Capital Management Company Profile

Annaly Capital Management, Inc. is a mortgage real estate investment trust (REIT). The Company owns a portfolio of real estate related investments. Its investment groups primarily consist of Agency, which invests primarily in various types of Agency mortgage-backed securities and related derivatives to hedge these investments; Residential credit, which invests primarily in non-Agency mortgage-backed assets within securitized products and residential mortgage loan markets; Commercial real estate, which originates and invests in commercial mortgage loans, securities, and other commercial real estate investments, and Middle market, which provides customized debt financing to middle-market businesses. Its business operations consist of Annaly Commercial Real Estate Group, Inc., which is its subsidiary that specializes in originating or acquiring, financing and managing commercial loans and other commercial real estate debt; Annaly Middle Market Lending LLC, and RCap Securities, Inc.

AGNC Investment Company Profile

AGNC Investment Corp., formerly American Capital Agency Corp., is a real estate investment trust. The Company invests in agency residential mortgage-backed securities on a leveraged basis. Its investments consist of residential mortgage pass-through securities and collateralized mortgage obligations (CMOs) for which the principal and interest payments are guaranteed by a government-sponsored enterprise, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), or by the United States Government agency, such as the Government National Mortgage Association (Ginnie Mae) (collectively, GSEs). Its agency securities include agency residential mortgage-backed securities (Agency RMBS) and to-be-announced forward contracts (TBAs). Its Non-Agency Securities include credit risk transfer securities (CRT), non-agency residential mortgage-backed securities (Non-Agency RMBS) and commercial mortgage-backed securities (CMBS).

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