Critical Review: Simon Property Group (NYSE:SPG) versus Two Harbors Investment (NYSE:TWO)

Simon Property Group (NYSE:SPGGet Rating) and Two Harbors Investment (NYSE:TWOGet Rating) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, valuation and institutional ownership.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Simon Property Group and Two Harbors Investment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Simon Property Group 0 6 11 0 2.65
Two Harbors Investment 0 4 1 0 2.20

Simon Property Group presently has a consensus price target of $159.41, suggesting a potential upside of 24.95%. Two Harbors Investment has a consensus price target of $6.01, suggesting a potential upside of 17.84%. Given Simon Property Group’s stronger consensus rating and higher possible upside, equities analysts plainly believe Simon Property Group is more favorable than Two Harbors Investment.

Earnings and Valuation

This table compares Simon Property Group and Two Harbors Investment’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Simon Property Group $5.12 billion 8.19 $2.25 billion $6.84 18.65
Two Harbors Investment $168.60 million 10.41 $187.23 million $0.39 13.08

Simon Property Group has higher revenue and earnings than Two Harbors Investment. Two Harbors Investment is trading at a lower price-to-earnings ratio than Simon Property Group, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

86.6% of Simon Property Group shares are owned by institutional investors. Comparatively, 69.5% of Two Harbors Investment shares are owned by institutional investors. 8.5% of Simon Property Group shares are owned by insiders. Comparatively, 0.8% of Two Harbors Investment shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Simon Property Group pays an annual dividend of $6.60 per share and has a dividend yield of 5.2%. Two Harbors Investment pays an annual dividend of $0.68 per share and has a dividend yield of 13.3%. Simon Property Group pays out 96.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Two Harbors Investment pays out 174.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Simon Property Group has raised its dividend for 1 consecutive years.

Volatility & Risk

Simon Property Group has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500. Comparatively, Two Harbors Investment has a beta of 1.71, meaning that its share price is 71% more volatile than the S&P 500.

Profitability

This table compares Simon Property Group and Two Harbors Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Simon Property Group 43.97% 58.02% 6.26%
Two Harbors Investment 111.05% 15.39% 2.33%

Summary

Simon Property Group beats Two Harbors Investment on 13 of the 17 factors compared between the two stocks.

About Simon Property Group (Get Rating)

Simon is a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE: SPG). Our properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales.

About Two Harbors Investment (Get Rating)

Two Harbors Investment Corp. operates as a real estate investment trust (REIT) that focuses on investing in, financing, and managing residential mortgage-backed securities (RMBS), non-agency securities, mortgage servicing rights, and other financial assets in the United States. Its target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, and hybrid adjustable-rate mortgage (ARMs); and other assets, such as financial and mortgage-related assets, including non-agency securities and non-hedging transactions. The company qualifies as a REIT for federal income tax purposes. As a REIT, the company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in Minnetonka, Minnesota.

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