Head to Head Analysis: PennyMac Mortgage Investment Trust (NYSE:PMT) and Apollo Commercial Real Estate Finance (NYSE:ARI)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Apollo Commercial Real Estate Finance	-1.49%	8.42%	1.74%
PennyMac Mortgage Investment Trust	34.65%	7.68%	0.71%

Valuation & Earnings

This table compares Apollo Commercial Real Estate Finance and PennyMac Mortgage Investment Trust”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Apollo Commercial Real Estate Finance	$303.67 million	4.89	-$119.64 million	($0.14)	-76.36
PennyMac Mortgage Investment Trust	$144.62 million	7.45	$160.98 million	$0.72	17.19

PennyMac Mortgage Investment Trust has lower revenue, but higher earnings than Apollo Commercial Real Estate Finance. Apollo Commercial Real Estate Finance 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.

Insider & Institutional Ownership

54.4% of Apollo Commercial Real Estate Finance shares are owned by institutional investors. Comparatively, 67.4% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. 0.7% of Apollo Commercial Real Estate Finance shares are owned by insiders. Comparatively, 0.9% of PennyMac Mortgage Investment Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Apollo Commercial Real Estate Finance and PennyMac Mortgage Investment Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Apollo Commercial Real Estate Finance	0	3	2	0	2.40
PennyMac Mortgage Investment Trust	0	5	1	0	2.17

Apollo Commercial Real Estate Finance presently has a consensus price target of $10.31, indicating a potential downside of 3.53%. PennyMac Mortgage Investment Trust has a consensus price target of $14.00, indicating a potential upside of 13.13%. Given PennyMac Mortgage Investment Trust’s higher probable upside, analysts clearly believe PennyMac Mortgage Investment Trust is more favorable than Apollo Commercial Real Estate Finance.

Dividends

Apollo Commercial Real Estate Finance pays an annual dividend of $1.00 per share and has a dividend yield of 9.4%. PennyMac Mortgage Investment Trust pays an annual dividend of $1.60 per share and has a dividend yield of 12.9%. Apollo Commercial Real Estate Finance pays out -714.3% of its earnings in the form of a dividend. 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.

Risk & Volatility

Apollo Commercial Real Estate Finance has a beta of 1.57, meaning that its share price is 57% more volatile than the S&P 500. Comparatively, PennyMac Mortgage Investment Trust has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500.

Summary

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

About Apollo Commercial Real Estate Finance

Apollo Commercial Real Estate Finance, Inc. operates as a real estate investment trust (REIT) that originates, acquires, invests in, and manages commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments in the United States, the United Kingdom, and Europe. It is qualified as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income taxes, if the company distributes at least 90% of its REIT taxable income to its stockholders. Apollo Commercial Real Estate Finance, Inc. was incorporated in 2009 and is based in New York, New York.

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.