Cherry Hill Mortgage Investment Corporation (NYSE: CHMI) and KKR Real Estate Finance Trust (NYSE:KREF) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, profitability, institutional ownership, analyst recommendations, risk and valuation.

Insider & Institutional Ownership

62.4% of Cherry Hill Mortgage Investment Corporation shares are held by institutional investors. Comparatively, 21.4% of KKR Real Estate Finance Trust shares are held by institutional investors. 8.9% of Cherry Hill Mortgage Investment Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Cherry Hill Mortgage Investment Corporation and KKR Real Estate Finance Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Cherry Hill Mortgage Investment Corporation $30.72 million 7.43 $24.83 million $6.75 2.66
KKR Real Estate Finance Trust $41.19 million 26.00 $31.15 million N/A N/A

KKR Real Estate Finance Trust has higher revenue and earnings than Cherry Hill Mortgage Investment Corporation.

Profitability

This table compares Cherry Hill Mortgage Investment Corporation and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cherry Hill Mortgage Investment Corporation 136.70% 9.49% 1.58%
KKR Real Estate Finance Trust 77.41% 6.08% 0.75%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Cherry Hill Mortgage Investment Corporation and KKR Real Estate Finance Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cherry Hill Mortgage Investment Corporation 0 1 3 0 2.75
KKR Real Estate Finance Trust 0 3 0 0 2.00

Cherry Hill Mortgage Investment Corporation presently has a consensus price target of $19.25, suggesting a potential upside of 7.30%. KKR Real Estate Finance Trust has a consensus price target of $22.50, suggesting a potential upside of 12.78%. Given KKR Real Estate Finance Trust’s higher probable upside, analysts clearly believe KKR Real Estate Finance Trust is more favorable than Cherry Hill Mortgage Investment Corporation.

Dividends

Cherry Hill Mortgage Investment Corporation pays an annual dividend of $1.96 per share and has a dividend yield of 10.9%. KKR Real Estate Finance Trust pays an annual dividend of $1.48 per share and has a dividend yield of 7.4%. Cherry Hill Mortgage Investment Corporation pays out 29.0% of its earnings in the form of a dividend.

Summary

Cherry Hill Mortgage Investment Corporation beats KKR Real Estate Finance Trust on 8 of the 13 factors compared between the two stocks.

Cherry Hill Mortgage Investment Corporation Company Profile

Cherry Hill Mortgage Investment Corporation is a residential real estate finance company. The Company is focused on acquiring, investing in and managing residential mortgage assets in the United States. Its principal objective is to generate attractive current yields and risk-adjusted total returns for its stockholders over the long term, primarily through dividend distributions and secondarily through capital appreciation. The Company focuses on attaining this objective, subject to market conditions and availability and terms of financing, by selectively constructing and managing a targeted portfolio of Servicing Related Assets, residential mortgage-backed securities (RMBS), prime mortgage loans and other cashflowing residential mortgage assets. The Company operates its business through segments, including investments in RMBS; investments in Servicing Related Assets, and All Other. The Company is externally managed by Cherry Hill Mortgage Management, LLC.

KKR Real Estate Finance Trust Company Profile

KKR Real Estate Finance Trust Inc is a real estate finance company that focuses primarily on originating and acquiring senior mortgage loans secured by commercial real estate assets (CRE). KKR manages investments across multiple asset classes, including private equity, real estate, energy, infrastructure, credit and hedge funds. The Company’s investment strategy is to originate or acquire senior mortgage loans collateralized by institutional-quality CRE assets. Its target assets also include mezzanine loans, preferred equity and other debt-oriented instruments. The Company’s investment objective is capital preservation and generating attractive risk-adjusted returns for its stockholders over the long term, primarily through dividends.

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