Head to Head Review: MFA Financial (MFA) vs. Great Ajax Corp. (AJX)

MFA Financial (NYSE: MFA) and Great Ajax Corp. (NYSE:AJX) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, analyst recommendations, earnings, valuation and profitability.

Earnings & Valuation

This table compares MFA Financial and Great Ajax Corp.’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MFA Financial $376.15 million 9.17 $309.13 million $0.78 11.15
Great Ajax Corp. $50.65 million 4.98 $27.67 million $1.57 9.12

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

Dividends

MFA Financial pays an annual dividend of $0.80 per share and has a dividend yield of 9.2%. Great Ajax Corp. pays an annual dividend of $1.20 per share and has a dividend yield of 8.4%. MFA Financial pays out 102.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Great Ajax Corp. pays out 76.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares MFA Financial and Great Ajax Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MFA Financial 61.94% 10.12% 2.58%
Great Ajax Corp. 58.46% 10.22% 3.02%

Risk and Volatility

MFA Financial has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500. Comparatively, Great Ajax Corp. has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for MFA Financial and Great Ajax Corp., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MFA Financial 0 2 2 0 2.50
Great Ajax Corp. 0 3 2 0 2.40

MFA Financial currently has a consensus price target of $8.50, suggesting a potential downside of 2.30%. Great Ajax Corp. has a consensus price target of $15.20, suggesting a potential upside of 6.15%. Given Great Ajax Corp.’s higher possible upside, analysts plainly believe Great Ajax Corp. is more favorable than MFA Financial.

Institutional & Insider Ownership

80.1% of MFA Financial shares are owned by institutional investors. Comparatively, 75.3% of Great Ajax Corp. shares are owned by institutional investors. 0.9% of MFA Financial shares are owned by insiders. Comparatively, 3.8% of Great Ajax Corp. shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

MFA Financial beats Great Ajax Corp. on 8 of the 15 factors compared between the two stocks.

About MFA Financial

MFA Financial, Inc. is engaged in the real estate finance business. The Company’s subsidiaries invest in residential mortgage assets, including Non-Agency mortgage-backed securities (MBS), Agency MBS, residential whole loans and credit risk transfer (CRT) securities. The Company’s Non-Agency MBS portfolio primarily consists of Legacy Non-Agency MBS and 3 Year Step-up securities. In addition to Non-Agency MBS investments, the Company invests in re-performing and non-performing residential whole loans through its interests in certain consolidated trusts. The mortgages collateralizing its Agency MBS portfolio are predominantly Hybrids, 15-year fixed-rate mortgages and adjustable-rate mortgages (ARMs).

About Great Ajax Corp.

Great Ajax Corp. is an externally managed real estate company. The Company is focused on acquiring, investing in and managing a portfolio of re-performing and non-performing mortgage loans secured by single-family residences and single-family properties. Its segment is focused on non-performing mortgages and re-performing mortgages. It also invests in loans secured by multi-family residential and commercial mixed use retail/residential properties, as well as in the properties directly. It also holds real estate-owned properties (REO) acquired upon the foreclosure or other settlement of its owned non-performing loans, as well as through outright purchases. It is managed by Thetis Asset Management LLC, an affiliated entity. Its mortgage loans and other real estate assets are serviced by Gregory Funding LLC, an affiliated entity. The Company conducts its business through its operating partnership, Great Ajax Operating Partnership L.P.

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