Financial Comparison: Annaly Capital Management (NYSE:NLY) and Paramount Group (NYSE:PGRE)

Annaly Capital Management (NYSE:NLY) and Paramount Group (NYSE:PGRE) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Risk and Volatility

Annaly Capital Management has a beta of 1.54, meaning that its stock price is 54% more volatile than the S&P 500. Comparatively, Paramount Group has a beta of 1.22, meaning that its stock price is 22% more volatile than the S&P 500.

Insider and Institutional Ownership

51.6% of Annaly Capital Management shares are owned by institutional investors. Comparatively, 65.6% of Paramount Group shares are owned by institutional investors. 0.2% of Annaly Capital Management shares are owned by company insiders. Comparatively, 13.5% of Paramount Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Annaly Capital Management	-8.38%	15.13%	1.63%
Paramount Group	-34.97%	-6.07%	-3.13%

Dividends

Annaly Capital Management pays an annual dividend of $2.60 per share and has a dividend yield of 13.8%. Paramount Group pays an annual dividend of $0.14 per share and has a dividend yield of 3.0%. Annaly Capital Management pays out -268.0% of its earnings in the form of a dividend. Paramount Group pays out -11.7% 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.

Analyst Ratings

This is a breakdown of recent ratings for Annaly Capital Management and Paramount Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Annaly Capital Management	0	2	5	0	2.71
Paramount Group	2	2	1	0	1.80

Annaly Capital Management presently has a consensus target price of $21.08, indicating a potential upside of 11.67%. Paramount Group has a consensus target price of $4.60, indicating a potential downside of 1.50%. Given Annaly Capital Management’s stronger consensus rating and higher probable upside, research analysts clearly believe Annaly Capital Management is more favorable than Paramount Group.

Earnings & Valuation

This table compares Annaly Capital Management and Paramount Group’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Annaly Capital Management	$3.73 billion	2.53	-$1.64 billion	($0.97)	-19.46
Paramount Group	$742.79 million	1.37	-$259.74 million	($1.20)	-3.89

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

Summary

Annaly Capital Management beats Paramount Group on 12 of the 16 factors compared between the two stocks.

About Annaly Capital Management

Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.

About Paramount Group

Paramount Group, Inc. ("Paramount" or the "Company") is a fully-integrated real estate investment trust that owns, operates, manages, acquires and redevelops high-quality, Class A office properties located in select central business district submarkets of New York and San Francisco. Paramount is focused on maximizing the value of its portfolio by leveraging the sought-after locations of its assets and its proven property management capabilities to attract and retain high-quality tenants.