Head to Head Analysis: Federal Realty Investment Trust (NYSE:FRT) vs. Two Harbors Investment (NYSE:TWO)

Two Harbors Investment (NYSE:TWO) and Federal Realty Investment Trust (NYSE:FRT) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, dividends, institutional ownership and risk.

Valuation and Earnings

This table compares Two Harbors Investment and Federal Realty Investment Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Two Harbors Investment	$216.08 million	4.93	$298.17 million	($0.51)	-20.09
Federal Realty Investment Trust	$1.22 billion	6.71	$295.21 million	$3.49	27.34

Two Harbors Investment has higher earnings, but lower revenue than Federal Realty Investment Trust. Two Harbors Investment is trading at a lower price-to-earnings ratio than Federal Realty Investment Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Two Harbors Investment and Federal Realty Investment Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Two Harbors Investment	66.24%	6.52%	0.81%
Federal Realty Investment Trust	24.38%	9.89%	3.48%

Dividends

Two Harbors Investment pays an annual dividend of $1.80 per share and has a dividend yield of 17.6%. Federal Realty Investment Trust pays an annual dividend of $4.40 per share and has a dividend yield of 4.6%. Two Harbors Investment pays out -352.9% of its earnings in the form of a dividend. Federal Realty Investment Trust pays out 126.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Two Harbors Investment has increased its dividend for 1 consecutive years and Federal Realty Investment Trust has increased its dividend for 58 consecutive years. Two Harbors Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

64.2% of Two Harbors Investment shares are owned by institutional investors. Comparatively, 93.9% of Federal Realty Investment Trust shares are owned by institutional investors. 0.7% of Two Harbors Investment shares are owned by insiders. Comparatively, 1.0% of Federal Realty Investment Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings for Two Harbors Investment and Federal Realty Investment Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Two Harbors Investment	0	3	4	0	2.57
Federal Realty Investment Trust	0	4	8	0	2.67

Two Harbors Investment presently has a consensus price target of $13.14, suggesting a potential upside of 28.29%. Federal Realty Investment Trust has a consensus price target of $113.33, suggesting a potential upside of 18.77%. Given Two Harbors Investment’s higher possible upside, equities analysts clearly believe Two Harbors Investment is more favorable than Federal Realty Investment Trust.

Volatility and Risk

Two Harbors Investment has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, Federal Realty Investment Trust has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500.

Summary

Federal Realty Investment Trust beats Two Harbors Investment on 11 of the 17 factors compared between the two stocks.

About Two Harbors Investment

Two Harbors Investment Corp. invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through RoundPoint in the United States. The company target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, hybrid mortgage loans, or derivatives; and other assets, such as financial and mortgage-related assets, including non-agency securities and non-hedging transactions. It qualifies as a REIT for federal income tax purposes. As a REIT, the company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in St. Louis Park, Minnesota.

About Federal Realty Investment Trust

Federal Realty Investment Trust is an equity real estate investment trust, which engages in the provision of ownership, management, and redevelopment of retail and mixed-use properties located primarily in communities where demand exceeds supply in strategically selected metropolitan markets. The company was founded in 1962 and is headquartered in North Bethesda, MD.