Invesco Mortgage Capital (NYSE:IVR) and Vornado Realty Trust (NYSE:VNO) Financial Review

Vornado Realty Trust (NYSE:VNO) and Invesco Mortgage Capital (NYSE:IVR) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, dividends, valuation, analyst recommendations, earnings, profitability and institutional ownership.

Analyst Recommendations

This is a summary of recent ratings for Vornado Realty Trust and Invesco Mortgage Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vornado Realty Trust	3	6	2	0	1.91
Invesco Mortgage Capital	0	2	1	0	2.33

Vornado Realty Trust currently has a consensus target price of $34.07, suggesting a potential downside of 21.81%. Invesco Mortgage Capital has a consensus target price of $9.00, suggesting a potential upside of 12.64%. Given Invesco Mortgage Capital’s stronger consensus rating and higher probable upside, analysts clearly believe Invesco Mortgage Capital is more favorable than Vornado Realty Trust.

Dividends

Vornado Realty Trust pays an annual dividend of $0.30 per share and has a dividend yield of 0.7%. Invesco Mortgage Capital pays an annual dividend of $1.60 per share and has a dividend yield of 20.0%. Vornado Realty Trust pays out -103.4% of its earnings in the form of a dividend. Invesco Mortgage Capital pays out -152.4% 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. Invesco Mortgage Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

90.0% of Vornado Realty Trust shares are held by institutional investors. Comparatively, 40.5% of Invesco Mortgage Capital shares are held by institutional investors. 8.1% of Vornado Realty Trust shares are held by insiders. Comparatively, 0.2% of Invesco Mortgage Capital shares are held 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.

Earnings and Valuation

This table compares Vornado Realty Trust and Invesco Mortgage Capital”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vornado Realty Trust	$1.81 billion	4.58	$105.49 million	($0.29)	-150.24
Invesco Mortgage Capital	$277.93 million	1.58	-$15.86 million	($1.05)	-7.61

Vornado Realty Trust has higher revenue and earnings than Invesco Mortgage Capital. Vornado Realty Trust is trading at a lower price-to-earnings ratio than Invesco Mortgage Capital, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Vornado Realty Trust has a beta of 1.64, indicating that its stock price is 64% more volatile than the S&P 500. Comparatively, Invesco Mortgage Capital has a beta of 1.9, indicating that its stock price is 90% more volatile than the S&P 500.

Profitability

This table compares Vornado Realty Trust and Invesco Mortgage Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Vornado Realty Trust	0.46%	1.69%	0.48%
Invesco Mortgage Capital	-9.40%	59.85%	5.50%

About Vornado Realty Trust

Vornado Realty Trust is a fully – integrated equity real estate investment trust.

About Invesco Mortgage Capital

Invesco Mortgage Capital Inc. operates as a real estate investment trust (REIT) that invests, finances, and manages mortgage-backed securities and other mortgage-related assets in the United States. It invests in residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS) that are guaranteed by a U.S. government agency or federally chartered corporation; RMBS and CMBS that are not issued or guaranteed by the United States government agency or federally chartered corporation; the United States treasury securities; real estate-related financing arrangements; to-be-announced securities forward contracts to purchase RMBS; and commercial mortgage loans. It has elected to be taxed as a REIT and would be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2008 and is headquartered in Atlanta, Georgia.