Financial Analysis: BrightSpire Capital (NYSE:BRSP) vs. Dynex Capital (NYSE:DX)

BrightSpire Capital (NYSE:BRSPGet Rating) and Dynex Capital (NYSE:DXGet Rating) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Dividends

BrightSpire Capital pays an annual dividend of $0.72 per share and has a dividend yield of 7.9%. Dynex Capital pays an annual dividend of $1.56 per share and has a dividend yield of 9.8%. BrightSpire Capital pays out -93.5% of its earnings in the form of a dividend. Dynex Capital pays out 45.2% 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.

Profitability

This table compares BrightSpire Capital and Dynex Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BrightSpire Capital -75.88% 6.36% 1.90%
Dynex Capital 170.29% 9.87% 1.92%

Institutional & Insider Ownership

67.6% of BrightSpire Capital shares are held by institutional investors. Comparatively, 40.9% of Dynex Capital shares are held by institutional investors. 1.0% of BrightSpire Capital shares are held by company insiders. Comparatively, 2.8% of Dynex Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for BrightSpire Capital and Dynex Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BrightSpire Capital 0 1 3 0 2.75
Dynex Capital 0 1 1 0 2.50

BrightSpire Capital currently has a consensus price target of $11.25, suggesting a potential upside of 23.36%. Dynex Capital has a consensus price target of $20.00, suggesting a potential upside of 25.71%. Given Dynex Capital’s higher possible upside, analysts plainly believe Dynex Capital is more favorable than BrightSpire Capital.

Risk and Volatility

BrightSpire Capital has a beta of 1.71, meaning that its share price is 71% more volatile than the S&P 500. Comparatively, Dynex Capital has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500.

Valuation & Earnings

This table compares BrightSpire Capital and Dynex Capital’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BrightSpire Capital $119.51 million 9.89 -$101.05 million ($0.77) -11.84
Dynex Capital $60.05 million 9.72 $102.26 million $3.45 4.61

Dynex Capital has lower revenue, but higher earnings than BrightSpire Capital. BrightSpire Capital is trading at a lower price-to-earnings ratio than Dynex Capital, indicating that it is currently the more affordable of the two stocks.

Summary

Dynex Capital beats BrightSpire Capital on 9 of the 16 factors compared between the two stocks.

About BrightSpire Capital (Get Rating)

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States. It focuses on originating, acquiring, financing, and managing a portfolio of CRE senior mortgage loans, mezzanine loans, preferred equity, debt securities, and net leased properties. The company qualifies as a real estate investment trust for federal income tax purposes. The company was formerly known as Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.

About Dynex Capital (Get Rating)

Dynex Capital, Inc., a mortgage real estate investment trust, invests in mortgage-backed securities (MBS) on a leveraged basis in the United States. It invests in agency and non-agency MBS consisting of residential MBS, commercial MBS (CMBS), and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the U.S. government or a U.S. government-sponsored entity, such as Fannie Mae and Freddie Mac. Non-Agency MBS have no such guaranty of payment. The company has qualified as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 1987 and is headquartered in Glen Allen, Virginia.

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