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

Insider and Institutional Ownership

52.2% of Chimera Investment Corporation shares are held by institutional investors. Comparatively, 56.1% of American Capital Agency Corp. shares are held by institutional investors. 0.7% of Chimera Investment Corporation shares are held by insiders. Comparatively, 0.5% of American Capital Agency Corp. shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Chimera Investment Corporation and American Capital Agency Corp.’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Chimera Investment Corporation $933.35 million 3.84 $655.36 million $3.49 5.47
American Capital Agency Corp. N/A N/A N/A $4.84 4.49

Chimera Investment Corporation has higher revenue and earnings than American Capital Agency Corp.. American Capital Agency Corp. is trading at a lower price-to-earnings ratio than Chimera Investment Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

Chimera Investment Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 10.5%. American Capital Agency Corp. pays an annual dividend of $2.16 per share and has a dividend yield of 9.9%. Chimera Investment Corporation pays out 57.3% of its earnings in the form of a dividend. American Capital Agency Corp. pays out 44.6% 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. American Capital Agency Corp. has raised its dividend for 2 consecutive years.

Analyst Ratings

This is a summary of current ratings and price targets for Chimera Investment Corporation and American Capital Agency Corp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chimera Investment Corporation 0 3 0 0 2.00
American Capital Agency Corp. 1 5 2 0 2.13

Chimera Investment Corporation currently has a consensus target price of $18.50, suggesting a potential downside of 3.04%. American Capital Agency Corp. has a consensus target price of $19.61, suggesting a potential downside of 9.81%. Given Chimera Investment Corporation’s higher possible upside, research analysts clearly believe Chimera Investment Corporation is more favorable than American Capital Agency Corp..

Profitability

This table compares Chimera Investment Corporation and American Capital Agency Corp.’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%
American Capital Agency Corp. 161.49% 12.08% 1.55%

Volatility & Risk

Chimera Investment Corporation has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, American Capital Agency Corp. has a beta of 0.2, meaning that its share price is 80% less volatile than the S&P 500.

Summary

American Capital Agency Corp. beats Chimera Investment Corporation on 8 of the 15 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.

American Capital Agency 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).

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