Contrasting MFA Financial (NYSE:MFA) & Angel Oak Mortgage REIT (NYSE:AOMR)

Angel Oak Mortgage REIT (NYSE:AOMR) and MFA Financial (NYSE:MFA) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, dividends, risk, institutional ownership, valuation, earnings and analyst recommendations.

Insider & Institutional Ownership

80.2% of Angel Oak Mortgage REIT shares are owned by institutional investors. Comparatively, 65.3% of MFA Financial shares are owned by institutional investors. 2.9% of Angel Oak Mortgage REIT shares are owned by company insiders. Comparatively, 0.8% of MFA Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Angel Oak Mortgage REIT and MFA Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Angel Oak Mortgage REIT	12.93%	6.42%	0.63%
MFA Financial	17.62%	8.61%	1.39%

Dividends

Angel Oak Mortgage REIT pays an annual dividend of $1.28 per share and has a dividend yield of 14.4%. MFA Financial pays an annual dividend of $1.44 per share and has a dividend yield of 15.4%. Angel Oak Mortgage REIT pays out 180.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MFA Financial pays out 169.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MFA Financial has increased its dividend for 1 consecutive years. MFA Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Angel Oak Mortgage REIT has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500. Comparatively, MFA Financial has a beta of 1.73, indicating that its share price is 73% more volatile than the S&P 500.

Valuation and Earnings

This table compares Angel Oak Mortgage REIT and MFA Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Angel Oak Mortgage REIT	$34.71 million	6.39	$28.75 million	$0.71	12.55
MFA Financial	$249.92 million	3.83	$119.25 million	$0.85	11.01

MFA Financial has higher revenue and earnings than Angel Oak Mortgage REIT. MFA Financial is trading at a lower price-to-earnings ratio than Angel Oak Mortgage REIT, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations for Angel Oak Mortgage REIT and MFA Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Angel Oak Mortgage REIT	1	2	4	0	2.43
MFA Financial	1	3	3	0	2.29

Angel Oak Mortgage REIT currently has a consensus target price of $11.60, indicating a potential upside of 30.22%. MFA Financial has a consensus target price of $11.10, indicating a potential upside of 18.65%. Given Angel Oak Mortgage REIT’s stronger consensus rating and higher probable upside, analysts plainly believe Angel Oak Mortgage REIT is more favorable than MFA Financial.

Summary

MFA Financial beats Angel Oak Mortgage REIT on 10 of the 17 factors compared between the two stocks.

About Angel Oak Mortgage REIT

Angel Oak Mortgage REIT, Inc., a real estate finance company, focuses on acquiring and investing in first lien non- qualified mortgage loans and other mortgage-related assets in the United States mortgage market. It offers investment securities; residential mortgage loans; and commercial mortgage loans. 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 stockholders. The company was incorporated in 2018 and is headquartered in Atlanta, Georgia.

About MFA Financial

MFA Financial, Inc., together with its subsidiaries, operates as a real estate investment trust in the United States. It invests in residential mortgage securities, including non-agency mortgage-backed securities, agency MBS, and credit risk transfer securities; residential whole loans, including purchased performing loans, purchased credit deteriorated, and non-performing loans; and mortgage servicing rights related assets. The company was incorporated in 1997 and is based in New York, New York.