Financial Comparison: PennyMac Mortgage Investment Trust (NYSE:PMT) versus KKR Real Estate Finance Trust (NYSE:KREF)

PennyMac Mortgage Investment Trust (NYSE:PMT) and KKR Real Estate Finance Trust (NYSE:KREF) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, institutional ownership, profitability, risk and dividends.

Institutional & Insider Ownership

67.4% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. Comparatively, 70.2% of KKR Real Estate Finance Trust shares are owned by institutional investors. 0.9% of PennyMac Mortgage Investment Trust shares are owned by company insiders. Comparatively, 1.9% of KKR Real Estate Finance Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares PennyMac Mortgage Investment Trust and KKR Real Estate Finance Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PennyMac Mortgage Investment Trust	$334.19 million	3.21	$160.98 million	$0.72	17.12
KKR Real Estate Finance Trust	$564.63 million	1.12	$35.59 million	($0.66)	-14.58

PennyMac Mortgage Investment Trust has higher earnings, but lower revenue than KKR Real Estate Finance Trust. KKR Real Estate Finance Trust is trading at a lower price-to-earnings ratio than PennyMac Mortgage Investment Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares PennyMac Mortgage Investment Trust and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PennyMac Mortgage Investment Trust	34.65%	7.68%	0.71%
KKR Real Estate Finance Trust	-4.43%	1.61%	0.33%

Risk and Volatility

PennyMac Mortgage Investment Trust has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500. Comparatively, KKR Real Estate Finance Trust has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.

Dividends

PennyMac Mortgage Investment Trust pays an annual dividend of $1.60 per share and has a dividend yield of 13.0%. KKR Real Estate Finance Trust pays an annual dividend of $1.00 per share and has a dividend yield of 10.4%. PennyMac Mortgage Investment Trust pays out 222.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. KKR Real Estate Finance Trust pays out -151.5% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of recent ratings and price targets for PennyMac Mortgage Investment Trust and KKR Real Estate Finance Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PennyMac Mortgage Investment Trust	0	5	1	0	2.17
KKR Real Estate Finance Trust	0	1	4	0	2.80

PennyMac Mortgage Investment Trust presently has a consensus target price of $14.00, indicating a potential upside of 13.58%. KKR Real Estate Finance Trust has a consensus target price of $11.95, indicating a potential upside of 24.16%. Given KKR Real Estate Finance Trust’s stronger consensus rating and higher possible upside, analysts plainly believe KKR Real Estate Finance Trust is more favorable than PennyMac Mortgage Investment Trust.

Summary

PennyMac Mortgage Investment Trust beats KKR Real Estate Finance Trust on 9 of the 16 factors compared between the two stocks.

About PennyMac Mortgage Investment Trust

PennyMac Mortgage Investment Trust, through its subsidiary, primarily invests in mortgage-related assets in the United States. The company operates through: Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production segments. Its Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, subordinate mortgage-backed securities (MBS), distressed loans, and real estate. The company's Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency MBS, as well as related interest rate hedging activities. Its Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. The company primarily sells its loans to government-sponsored entities or PennyMac Loan Services, LLC. 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 shareholders. The company was incorporated in 2009 and is headquartered in Westlake Village, California.

About KKR Real Estate Finance Trust

KKR Real Estate Finance Trust Inc., a mortgage real estate investment trust, focuses primarily on originating and acquiring transitional senior loans secured by commercial real estate (CRE) assets. It engages in the origination and purchase of credit investments related to CRE, including leveraged and unleveraged commercial real estate loans. The company has elected to be taxed as a real estate investment trust and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. KKR Real Estate Finance Trust Inc. was incorporated in 2014 and is headquartered in New York, New York.