Critical Comparison: Western Asset Mortgage Capital (NYSE:WMC) vs. AGNC Investment (NASDAQ:AGNCP)

Western Asset Mortgage Capital (NYSE:WMC) and AGNC Investment (NASDAQ:AGNCP) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, profitability, valuation, earnings and risk.

Analyst Ratings

This is a breakdown of current ratings for Western Asset Mortgage Capital and AGNC Investment, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western Asset Mortgage Capital	0	0	1	0	3.00
AGNC Investment	0	0	0	0	N/A

Western Asset Mortgage Capital currently has a consensus price target of $17.50, suggesting a potential upside of 66.67%. Given Western Asset Mortgage Capital’s higher probable upside, equities research analysts clearly believe Western Asset Mortgage Capital is more favorable than AGNC Investment.

Profitability

This table compares Western Asset Mortgage Capital and AGNC Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Western Asset Mortgage Capital	-26.07%	8.17%	0.32%
AGNC Investment	N/A	N/A	N/A

Insider and Institutional Ownership

14.7% of Western Asset Mortgage Capital shares are held by institutional investors. 1.6% of Western Asset Mortgage Capital shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Western Asset Mortgage Capital and AGNC Investment’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Western Asset Mortgage Capital	-$21.37 million	-2.97	-$89.08 million	($7.14)	-1.47
AGNC Investment	$108.00 million	N/A	N/A	N/A	N/A

AGNC Investment has higher revenue and earnings than Western Asset Mortgage Capital.

Dividends

Western Asset Mortgage Capital pays an annual dividend of $1.40 per share and has a dividend yield of 13.3%. AGNC Investment pays an annual dividend of $1.53 per share and has a dividend yield of 7.1%. Western Asset Mortgage Capital pays out -19.6% of its earnings in the form of a dividend.

Summary

Western Asset Mortgage Capital beats AGNC Investment on 8 of the 10 factors compared between the two stocks.

About Western Asset Mortgage Capital

Western Asset Mortgage Capital Corporation operates as a real estate investment trust. It invests in, acquires, and manages a portfolio of assets with a focus on residential real estate related investments, including non-qualified mortgage loans, non-agency residential mortgage-backed securities (RMBS), and other related investments. The company qualifies as a real estate investment trust for federal income tax purposes. Western Asset Mortgage Capital Corporation was incorporated in 2009 and is based in Pasadena, California.

About AGNC Investment

AGNC Investment Corp. operates as a real estate investment trust (REIT) in the United States. It invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by the United States government-sponsored enterprise or by the United States government agency. The company funds its investments primarily through collateralized borrowings structured as repurchase agreements. It has elected to be taxed as a REIT under the Internal Revenue Code of 1986 and would not be subject to federal corporate income taxes, if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as American Capital Agency Corp. and changed its name to AGNC Investment Corp. in September 2016. AGNC Investment Corp. was incorporated in 2008 and is headquartered in Bethesda, Maryland.