AFC Gamma (NASDAQ:AFCG) & Annaly Capital Management (NYSE:NLY) Critical Comparison

Annaly Capital Management (NYSE:NLY) and AFC Gamma (NASDAQ:AFCG) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, profitability, earnings, analyst recommendations and risk.

Earnings and Valuation

This table compares Annaly Capital Management and AFC Gamma”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Annaly Capital Management	$5.96 billion	2.64	$2.03 billion	$2.78	7.88
AFC Gamma	$31.32 million	2.01	-$20.67 million	($0.95)	-2.82

Annaly Capital Management has higher revenue and earnings than AFC Gamma. AFC Gamma is trading at a lower price-to-earnings ratio than Annaly Capital Management, indicating that it is currently the more affordable of the two stocks.

Dividends

Annaly Capital Management pays an annual dividend of $2.80 per share and has a dividend yield of 12.8%. AFC Gamma pays an annual dividend of $0.53 per share and has a dividend yield of 19.8%. Annaly Capital Management pays out 100.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AFC Gamma pays out -55.8% of its earnings in the form of a dividend. Annaly Capital Management has raised its dividend for 2 consecutive years. AFC Gamma is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Annaly Capital Management and AFC Gamma’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Annaly Capital Management	34.02%	15.80%	1.68%
AFC Gamma	-70.17%	0.99%	0.62%

Analyst Ratings

This is a breakdown of current recommendations for Annaly Capital Management and AFC Gamma, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Annaly Capital Management	0	4	7	1	2.75
AFC Gamma	2	1	0	0	1.33

Annaly Capital Management presently has a consensus target price of $24.11, indicating a potential upside of 10.02%. AFC Gamma has a consensus target price of $4.50, indicating a potential upside of 67.91%. Given AFC Gamma’s higher probable upside, analysts plainly believe AFC Gamma is more favorable than Annaly Capital Management.

Institutional and Insider Ownership

51.6% of Annaly Capital Management shares are held by institutional investors. Comparatively, 26.5% of AFC Gamma shares are held by institutional investors. 0.2% of Annaly Capital Management shares are held by company insiders. Comparatively, 25.1% of AFC Gamma shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Annaly Capital Management has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500. Comparatively, AFC Gamma has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500.

Summary

Annaly Capital Management beats AFC Gamma on 14 of the 18 factors compared between the two stocks.

About Annaly Capital Management

Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.

About AFC Gamma

AFC Gamma, Inc. originates, structures, underwrites, and invests in senior secured loans, and other various commercial real estate loans and debt securities for established companies operating in the cannabis industry. It primarily originates loans structured as senior loans secured by real estate, equipment, and licenses and/or other assets of the loan parties to the extent permitted by applicable laws and the regulations governing such loan parties. The company has elected and qualified to be taxed as a real estate investment trust for the United States federal income tax purposes under the Internal Revenue Code of 1986. AFC Gamma, Inc. was incorporated in 2020 and is based in West Palm Beach, Florida.