Critical Contrast: Chimera Investment Corporation (CIM) & PennyMac Mortgage Investment Trust (PMT)
Chimera Investment Corporation (NYSE: CIM) and PennyMac Mortgage Investment Trust (NYSE:PMT) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.
This table compares Chimera Investment Corporation and PennyMac Mortgage Investment Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Chimera Investment Corporation||63.94%||14.27%||2.52%|
|PennyMac Mortgage Investment Trust||37.97%||8.67%||1.95%|
Risk & Volatility
Chimera Investment Corporation has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, PennyMac Mortgage Investment Trust has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500.
This is a breakdown of recent recommendations and price targets for Chimera Investment Corporation and PennyMac Mortgage Investment Trust, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Chimera Investment Corporation||0||3||0||0||2.00|
|PennyMac Mortgage Investment Trust||0||4||3||0||2.43|
Chimera Investment Corporation currently has a consensus target price of $18.50, indicating a potential downside of 3.75%. PennyMac Mortgage Investment Trust has a consensus target price of $16.95, indicating a potential upside of 0.12%. Given PennyMac Mortgage Investment Trust’s stronger consensus rating and higher probable upside, analysts plainly believe PennyMac Mortgage Investment Trust is more favorable than Chimera Investment Corporation.
Chimera Investment Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 10.4%. PennyMac Mortgage Investment Trust pays an annual dividend of $1.88 per share and has a dividend yield of 11.1%. Chimera Investment Corporation pays out 57.3% of its earnings in the form of a dividend. PennyMac Mortgage Investment Trust pays out 109.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PennyMac Mortgage Investment Trust has increased its dividend for 2 consecutive years. PennyMac Mortgage Investment Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider and Institutional Ownership
52.2% of Chimera Investment Corporation shares are owned by institutional investors. Comparatively, 62.5% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. 0.7% of Chimera Investment Corporation shares are owned by insiders. Comparatively, 1.8% of PennyMac Mortgage Investment Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares Chimera Investment Corporation and PennyMac Mortgage Investment Trust’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Chimera Investment Corporation||$933.35 million||3.87||$655.36 million||$3.49||5.51|
|PennyMac Mortgage Investment Trust||$318.72 million||3.55||$114.30 million||$1.71||9.90|
Chimera Investment Corporation has higher revenue and earnings than PennyMac Mortgage Investment Trust. Chimera Investment Corporation is trading at a lower price-to-earnings ratio than PennyMac Mortgage Investment Trust, indicating that it is currently the more affordable of the two stocks.
Chimera Investment Corporation beats PennyMac Mortgage Investment Trust on 9 of the 17 factors compared between the two stocks.
Chimera Investment Corporation Company Profile
Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.
PennyMac Mortgage Investment Trust Company Profile
PennyMac Mortgage Investment Trust is a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. The Company conducts all of its operations, and makes all of its investments, through PennyMac Operating Partnership, L.P. (its Operating Partnership) and its subsidiaries. It operates through two segments: correspondent production and investment activities. Its investment activities segment represents the Company’s investments in mortgage-related assets. The correspondent production segment represents the Company’s operations aimed at serving as an intermediary between mortgage lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality mortgage loans either directly or in the form of MBS, using the services of PNMAC Capital Management (the Manager or PCM) and PennyMac Loan Services, LLC (PLS), both indirect subsidiaries of PennyMac Financial Services, Inc. (PFSI or PennyMac).
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