Financial Analysis: New York Mortgage Trust (NASDAQ:NYMT) vs. ARMOUR Residential REIT (NYSE:ARR)

New York Mortgage Trust (NASDAQ:NYMT) and ARMOUR Residential REIT (NYSE:ARR) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their profitability, earnings, valuation, institutional ownership, dividends, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of current ratings and target prices for New York Mortgage Trust and ARMOUR Residential REIT, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
New York Mortgage Trust	0	1	2	0	2.67
ARMOUR Residential REIT	0	5	1	0	2.17

New York Mortgage Trust presently has a consensus target price of $7.92, indicating a potential upside of 11.58%. ARMOUR Residential REIT has a consensus target price of $15.50, indicating a potential upside of 1.57%. Given New York Mortgage Trust’s stronger consensus rating and higher possible upside, equities research analysts plainly believe New York Mortgage Trust is more favorable than ARMOUR Residential REIT.

Profitability

This table compares New York Mortgage Trust and ARMOUR Residential REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
New York Mortgage Trust	12.50%	7.59%	0.69%
ARMOUR Residential REIT	-4.55%	15.89%	1.64%

Earnings & Valuation

This table compares New York Mortgage Trust and ARMOUR Residential REIT”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
New York Mortgage Trust	$401.28 million	1.60	-$62.03 million	$0.19	37.34
ARMOUR Residential REIT	-$21.36 million	-65.42	-$14.39 million	($0.24)	-63.58

ARMOUR Residential REIT has lower revenue, but higher earnings than New York Mortgage Trust. ARMOUR Residential REIT is trading at a lower price-to-earnings ratio than New York Mortgage Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

New York Mortgage Trust pays an annual dividend of $0.80 per share and has a dividend yield of 11.3%. ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 18.9%. New York Mortgage Trust pays out 421.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ARMOUR Residential REIT pays out -1,200.0% of its earnings in the form of a dividend. ARMOUR Residential REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

New York Mortgage Trust has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 1.39, indicating that its stock price is 39% more volatile than the S&P 500.

Insider and Institutional Ownership

54.9% of New York Mortgage Trust shares are owned by institutional investors. Comparatively, 54.2% of ARMOUR Residential REIT shares are owned by institutional investors. 1.7% of New York Mortgage Trust shares are owned by company insiders. Comparatively, 0.4% of ARMOUR Residential REIT shares are owned by company 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.

Summary

New York Mortgage Trust beats ARMOUR Residential REIT on 10 of the 16 factors compared between the two stocks.

About New York Mortgage Trust

New York Mortgage Trust, Inc. acquires, invests in, finances, and manages mortgage-related single-family and multi-family residential assets in the United States. Its targeted investments include residential loans, including business purpose loans; structured multi-family property investments, such as preferred equity in, and mezzanine loans to owners of multi-family properties; non-agency residential mortgage-backed securities (RMBS); agency RMBS; commercial mortgage-backed securities (CMBS); single-family rental properties; and other mortgage, residential housing, and credit-related assets. The company also 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 stockholders. New York Mortgage Trust, Inc. was incorporated in 2003 and is headquartered in New York, New York.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. Its securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans; and unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.