Head to Head Review: Dynex Capital (DX) vs. Ladder Capital (LADR)

Dynex Capital (NYSE: DX) and Ladder Capital (NYSE:LADR) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, profitability, analyst recommendations, institutional ownership, dividends, valuation and earnings.

Valuation & Earnings

This table compares Dynex Capital and Ladder Capital’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dynex Capital $91.90 million 4.14 $43.09 million $1.44 4.97
Ladder Capital $399.68 million 3.78 $66.72 million $0.87 15.69

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

Risk & Volatility

Dynex Capital has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500. Comparatively, Ladder Capital has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500.

Dividends

Dynex Capital pays an annual dividend of $0.72 per share and has a dividend yield of 10.1%. Ladder Capital pays an annual dividend of $1.20 per share and has a dividend yield of 8.8%. Dynex Capital pays out 50.0% of its earnings in the form of a dividend. Ladder Capital pays out 137.9% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

Net Margins Return on Equity Return on Assets
Dynex Capital 86.86% 11.08% 1.27%
Ladder Capital 27.38% 9.78% 2.40%

Analyst Recommendations

This is a breakdown of recent recommendations for Dynex Capital and Ladder Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dynex Capital 0 2 1 0 2.33
Ladder Capital 0 1 4 0 2.80

Dynex Capital presently has a consensus target price of $7.38, suggesting a potential upside of 3.15%. Ladder Capital has a consensus target price of $16.25, suggesting a potential upside of 19.05%. Given Ladder Capital’s stronger consensus rating and higher possible upside, analysts plainly believe Ladder Capital is more favorable than Dynex Capital.

Insider and Institutional Ownership

44.7% of Dynex Capital shares are held by institutional investors. Comparatively, 46.3% of Ladder Capital shares are held by institutional investors. 7.1% of Dynex Capital shares are held by company insiders. Comparatively, 12.5% of Ladder Capital shares are held by company 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

Ladder Capital beats Dynex Capital on 10 of the 16 factors compared between the two stocks.

Dynex Capital Company Profile

Dynex Capital, Inc. is an internally managed mortgage real estate investment trust, which invests in residential and commercial mortgage securities on a leveraged basis. The Company’s objective is to provide attractive risk-adjusted returns to its shareholders over the long term that is reflective of a leveraged fixed income portfolio with a focus on capital preservation. It seeks to provide returns to its shareholders through regular quarterly dividends and through capital appreciation. It invests in Agency and non-Agency mortgage-backed securities (MBS). MBS consists of residential MBS (RMBS), commercial MBS (CMBS) and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the United States Government or a government-sponsored entity (GSE), such as Fannie Mae and Freddie Mac.

Ladder Capital Company Profile

Ladder Capital Corp is a commercial real estate finance company. The Company’s segments include loans, securities, real estate and corporate/other. The loans segment includes mortgage loan receivables held for investment (balance sheet loans) and mortgage loan receivables held for sale (conduit loans). The securities segment consists of all of its activities related to commercial real estate securities, which include investments in commercial mortgage-backed securities (CMBS) and United States Agency Securities. The real estate segment includes net leased properties, office buildings, a warehouse and condominium units. The Corporate/other segment includes the Company’s investments in joint ventures, other asset management activities and operating expenses. The Company invests primarily in loans, securities and other interests in the United States commercial real estate, with a focus on senior secured assets.

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