Analyzing Sun Communities (SUI) and Two Harbors Investments Corp (TWO)
Sun Communities (NYSE: SUI) and Two Harbors Investments Corp (NYSE:TWO) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, earnings, valuation, dividends, institutional ownership and risk.
Sun Communities pays an annual dividend of $2.68 per share and has a dividend yield of 3.0%. Two Harbors Investments Corp pays an annual dividend of $1.04 per share and has a dividend yield of 10.2%. Sun Communities pays out 382.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Two Harbors Investments Corp pays out 72.7% of its earnings in the form of a dividend. Two Harbors Investments Corp is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider & Institutional Ownership
89.2% of Sun Communities shares are held by institutional investors. Comparatively, 72.3% of Two Harbors Investments Corp shares are held by institutional investors. 4.2% of Sun Communities shares are held by company insiders. Comparatively, 1.2% of Two Harbors Investments Corp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares Sun Communities and Two Harbors Investments Corp’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Sun Communities||$936.86 million||7.60||$443.91 million||$0.70||128.74|
|Two Harbors Investments Corp||$664.12 million||5.34||$499.03 million||$1.43||7.11|
Two Harbors Investments Corp has higher revenue, but lower earnings than Sun Communities. Two Harbors Investments Corp is trading at a lower price-to-earnings ratio than Sun Communities, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Sun Communities has a beta of 0.28, meaning that its stock price is 72% less volatile than the S&P 500. Comparatively, Two Harbors Investments Corp has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500.
This table compares Sun Communities and Two Harbors Investments Corp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Two Harbors Investments Corp||72.15%||10.26%||1.60%|
This is a summary of current ratings and recommmendations for Sun Communities and Two Harbors Investments Corp, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Two Harbors Investments Corp||0||2||3||0||2.60|
Sun Communities presently has a consensus price target of $87.80, suggesting a potential downside of 2.57%. Two Harbors Investments Corp has a consensus price target of $9.69, suggesting a potential downside of 4.74%. Given Sun Communities’ higher possible upside, equities research analysts plainly believe Sun Communities is more favorable than Two Harbors Investments Corp.
Two Harbors Investments Corp beats Sun Communities on 8 of the 14 factors compared between the two stocks.
About Sun Communities
Sun Communities, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company is a fully integrated real estate company, which, together with its affiliates and predecessors, has been in the business of acquiring, operating, developing, and expanding manufactured housing (MH) and recreational vehicle (RV). As of December 31, 2016, it owned and operated or had an interest in a portfolio of properties located throughout the United States and Ontario, Canada, including 226 MH communities, 87 RV communities, and 28 properties containing both MH and RV sites. The Company operates through two segments: Real Property Operations and Home Sales and Rentals. The Real Property Operations segment owns, operates, or has an interest in a portfolio, and develops MH communities and RV communities throughout the United States and is in the business of acquiring, operating, and expanding MH and RV communities.
About Two Harbors Investments Corp
Two Harbors Investment Corp. is a real estate investment trust. The Company is focused on investing in, financing and managing residential mortgage-backed securities (RMBS), mortgage servicing rights (MSR), commercial real estate and other financial assets (collectively known as target assets). Its investment objective is to provide attractive risk-adjusted total return to its stockholders over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses on managing various associated risks, including interest rate, prepayment, credit, mortgage spread and financing risk. The Company finances its RMBS and commercial real estate assets through short- and long-term borrowings structured as repurchase agreements and advances from the Federal Home Loan Bank of Des Moines, or the FHLB. It also finances its MSR through revolving credit facilities.
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