Analyzing AGNC Investment Corp. (AGNC) & New Residential Investment Corp. (NRZ)

AGNC Investment Corp. (NASDAQ: AGNC) and New Residential Investment Corp. (NYSE:NRZ) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for AGNC Investment Corp. and New Residential Investment Corp., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AGNC Investment Corp. 1 5 2 0 2.13
New Residential Investment Corp. 0 1 6 0 2.86

AGNC Investment Corp. currently has a consensus price target of $19.61, indicating a potential downside of 1.07%. New Residential Investment Corp. has a consensus price target of $18.15, indicating a potential upside of 4.13%. Given New Residential Investment Corp.’s stronger consensus rating and higher possible upside, analysts plainly believe New Residential Investment Corp. is more favorable than AGNC Investment Corp..

Risk and Volatility

AGNC Investment Corp. has a beta of 0.15, suggesting that its stock price is 85% less volatile than the S&P 500. Comparatively, New Residential Investment Corp. has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Dividends

AGNC Investment Corp. pays an annual dividend of $2.16 per share and has a dividend yield of 10.9%. New Residential Investment Corp. pays an annual dividend of $2.00 per share and has a dividend yield of 11.5%. AGNC Investment Corp. pays out 53.2% of its earnings in the form of a dividend. New Residential Investment Corp. pays out 64.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. AGNC Investment Corp. has increased its dividend for 3 consecutive years.

Insider and Institutional Ownership

58.6% of AGNC Investment Corp. shares are owned by institutional investors. Comparatively, 48.0% of New Residential Investment Corp. shares are owned by institutional investors. 0.5% of AGNC Investment Corp. shares are owned by company insiders. Comparatively, 0.5% of New Residential Investment Corp. shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares AGNC Investment Corp. and New Residential Investment Corp.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
AGNC Investment Corp. $927.00 million 8.37 $623.00 million $4.06 4.88
New Residential Investment Corp. $1.08 billion 4.98 $504.45 million $3.09 5.64

AGNC Investment Corp. has higher revenue, but lower earnings than New Residential Investment Corp.. AGNC Investment Corp. is trading at a lower price-to-earnings ratio than New Residential Investment Corp., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares AGNC Investment Corp. and New Residential Investment Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AGNC Investment Corp. 145.02% 12.00% 1.51%
New Residential Investment Corp. 60.06% 19.38% 3.99%

Summary

New Residential Investment Corp. beats AGNC Investment Corp. on 9 of the 17 factors compared between the two stocks.

AGNC Investment Corp. Company Profile

AGNC Investment Corp., formerly American Capital Agency Corp., is a real estate investment trust. The Company invests in agency residential mortgage-backed securities on a leveraged basis. Its investments consist of residential mortgage pass-through securities and collateralized mortgage obligations (CMOs) for which the principal and interest payments are guaranteed by a government-sponsored enterprise, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), or by the United States Government agency, such as the Government National Mortgage Association (Ginnie Mae) (collectively, GSEs). Its agency securities include agency residential mortgage-backed securities (Agency RMBS) and to-be-announced forward contracts (TBAs). Its Non-Agency Securities include credit risk transfer securities (CRT), non-agency residential mortgage-backed securities (Non-Agency RMBS) and commercial mortgage-backed securities (CMBS).

New Residential Investment Corp. Company Profile

New Residential Investment Corp. is a real estate investment trust (REIT). The Company focuses on investing in, and managing, investments related to residential real estate. The Company’s segments include investments in excess mortgage servicing rights (Excess MSRs); investments in mortgage servicing rights (MSRs); investments in servicer advances; investments in real estate securities; investments in residential mortgage loans; investments in consumer loans, and corporate. Its portfolio includes mortgage servicing related assets, residential mortgage backed securities (RMBS), residential mortgage loans and other investments. The Company’s servicing related assets include its investments in Excess MSRs, MSRs and servicer advances. The Company invests in agency RMBS and non-agency RMBS. The Company’s other investments consist of consumer loans.

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