Analyzing AFC Gamma (NASDAQ:AFCG) and Dynex Capital (NYSE:DX)

AFC Gamma (NASDAQ:AFCG) and Dynex Capital (NYSE:DX) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, profitability, institutional ownership, analyst recommendations, valuation, dividends and risk.

Dividends

AFC Gamma pays an annual dividend of $0.20 per share and has a dividend yield of 6.7%. Dynex Capital pays an annual dividend of $2.04 per share and has a dividend yield of 14.8%. AFC Gamma pays out -21.1% of its earnings in the form of a dividend. Dynex Capital pays out 120.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Dynex Capital has increased its dividend for 5 consecutive years. Dynex Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
AFC Gamma	-70.17%	0.99%	0.62%
Dynex Capital	34.75%	8.59%	1.14%

Earnings and Valuation

This table compares AFC Gamma and Dynex Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AFC Gamma	$31.32 million	2.25	-$20.67 million	($0.95)	-3.15
Dynex Capital	$533.52 million	5.34	$319.07 million	$1.69	8.14

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

Risk & Volatility

AFC Gamma has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Dynex Capital has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for AFC Gamma and Dynex Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AFC Gamma	1	2	0	0	1.67
Dynex Capital	0	2	2	0	2.50

AFC Gamma currently has a consensus price target of $4.50, suggesting a potential upside of 50.50%. Dynex Capital has a consensus price target of $14.75, suggesting a potential upside of 7.20%. Given AFC Gamma’s higher possible upside, equities analysts plainly believe AFC Gamma is more favorable than Dynex Capital.

Institutional and Insider Ownership

26.5% of AFC Gamma shares are held by institutional investors. Comparatively, 38.3% of Dynex Capital shares are held by institutional investors. 25.1% of AFC Gamma shares are held by insiders. Comparatively, 0.8% of Dynex Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Dynex Capital beats AFC Gamma on 14 of the 17 factors compared between the two stocks.

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.

About Dynex Capital

Dynex Capital, Inc., a mortgage real estate investment trust, invests in mortgage-backed securities (MBS) on a leveraged basis in the United States. It invests in agency and non-agency MBS consisting of residential MBS, commercial MBS (CMBS), and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the U.S. government or a U.S. government-sponsored entity, such as Fannie Mae and Freddie Mac. Non-Agency MBS have no such guaranty of payment. The company has qualified as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders as dividends. Dynex Capital, Inc. was incorporated in 1987 and is headquartered in Glen Allen, Virginia.