Reviewing Granite Point Mortgage Trust (NYSE:GPMT) and Great Ajax (NYSE:AJX)

Great Ajax (NYSE:AJX) and Granite Point Mortgage Trust (NYSE:GPMT) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, dividends, valuation, analyst recommendations, earnings and institutional ownership.

Volatility and Risk

Great Ajax has a beta of 1.87, suggesting that its stock price is 87% more volatile than the S&P 500. Comparatively, Granite Point Mortgage Trust has a beta of 1.8, suggesting that its stock price is 80% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Great Ajax and Granite Point Mortgage Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Great Ajax	0	2	1	0	2.33
Granite Point Mortgage Trust	1	1	2	0	2.25

Great Ajax currently has a consensus target price of $8.33, indicating a potential upside of 140.15%. Granite Point Mortgage Trust has a consensus target price of $6.56, indicating a potential upside of 49.49%. Given Great Ajax’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Great Ajax is more favorable than Granite Point Mortgage Trust.

Earnings & Valuation

This table compares Great Ajax and Granite Point Mortgage Trust’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Great Ajax	$72.33 million	1.32	-$47.07 million	($1.97)	-1.76
Granite Point Mortgage Trust	$263.73 million	0.85	-$63.20 million	($1.50)	-2.93

Great Ajax has higher earnings, but lower revenue than Granite Point Mortgage Trust. Granite Point Mortgage Trust is trading at a lower price-to-earnings ratio than Great Ajax, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Great Ajax and Granite Point Mortgage Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Great Ajax	N/A	-2.69%	-0.55%
Granite Point Mortgage Trust	-23.49%	4.10%	1.16%

Dividends

Great Ajax pays an annual dividend of $0.40 per share and has a dividend yield of 11.5%. Granite Point Mortgage Trust pays an annual dividend of $0.60 per share and has a dividend yield of 13.7%. Great Ajax pays out -20.3% of its earnings in the form of a dividend. Granite Point Mortgage Trust pays out -40.0% 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. Granite Point Mortgage Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

58.6% of Great Ajax shares are held by institutional investors. Comparatively, 51.6% of Granite Point Mortgage Trust shares are held by institutional investors. 3.8% of Great Ajax shares are held by insiders. Comparatively, 1.9% of Granite Point Mortgage Trust shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Great Ajax beats Granite Point Mortgage Trust on 9 of the 16 factors compared between the two stocks.

About Great Ajax

Great Ajax Corp. operates as a mortgage real estate investment trust. It acquires re-performing and non-performing loans; acquires or originates small balance commercial mortgage loans that are secured by multi-family residential and commercial mixed use retail/residential properties; and invests in single-family and smaller commercial properties. The company elected to be taxed as a real estate investment trust for U.S. federal income tax purposes. Great Ajax Corp. was incorporated in 2014 and is based in Tigard, Oregon.

About Granite Point Mortgage Trust

Granite Point Mortgage Trust Inc., a real estate investment trust, originates, invests in, and manages senior floating-rate commercial mortgage loans, and other debt and debt-like commercial real estate investments in the United States. The company provides intermediate-term bridge or transitional financing for various purposes, including acquisitions, recapitalizations, and refinancing, as well as a range of business plans, including lease-up, renovation, repositioning, and repurposing of the commercial property. The company qualifies as a real estate investment trust for federal income tax purposes. It generally 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 founded in 2015 and is headquartered in New York, New York.