MFA FINL INC/SH (NYSE:MFA) and American Assets Trust (NYSE:AAT) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, dividends, institutional ownership, risk and profitability.

Insider & Institutional Ownership

59.6% of MFA FINL INC/SH shares are owned by institutional investors. Comparatively, 95.2% of American Assets Trust shares are owned by institutional investors. 0.7% of MFA FINL INC/SH shares are owned by insiders. Comparatively, 32.8% of American Assets Trust shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for MFA FINL INC/SH and American Assets Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MFA FINL INC/SH 0 4 0 0 2.00
American Assets Trust 0 1 1 0 2.50

MFA FINL INC/SH presently has a consensus target price of $7.00, indicating a potential upside of 180.00%. American Assets Trust has a consensus target price of $33.00, indicating a potential upside of 18.32%. Given MFA FINL INC/SH’s higher possible upside, research analysts clearly believe MFA FINL INC/SH is more favorable than American Assets Trust.

Valuation & Earnings

This table compares MFA FINL INC/SH and American Assets Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MFA FINL INC/SH $581.73 million 1.95 $378.12 million $0.77 3.25
American Assets Trust $366.74 million 4.57 $60.19 million $2.20 12.68

MFA FINL INC/SH has higher revenue and earnings than American Assets Trust. MFA FINL INC/SH is trading at a lower price-to-earnings ratio than American Assets Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares MFA FINL INC/SH and American Assets Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MFA FINL INC/SH -105.71% 7.60% 1.94%
American Assets Trust 12.35% 3.62% 1.69%

Risk and Volatility

MFA FINL INC/SH has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500. Comparatively, American Assets Trust has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500.

Summary

American Assets Trust beats MFA FINL INC/SH on 8 of the 14 factors compared between the two stocks.

MFA FINL INC/SH Company Profile

MFA Financial, Inc., through its subsidiaries, operates as a real estate investment trust (REIT) in the United States. The company invests in residential mortgage assets, including non-agency mortgage-backed securities (MBS), agency MBS, residential whole loans, credit risk transfer securities, and mortgage servicing rights related assets. Its MBS are secured by hybrid, adjustable-rate, 15-year fixed-rate, and 30-year and longer-term fixed-rate mortgages, as well as mortgages that have interest rates that reset annually or more frequently. The company has elected to be taxed as a REIT and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. MFA Financial, Inc. was incorporated in 1997 and is headquartered in New York, New York.

American Assets Trust Company Profile

American Assets Trust, Inc. (the “company”) is a full service, vertically integrated and self-administered real estate investment trust, or REIT, headquartered in San Diego, California. The company has over 50 years of experience in acquiring, improving, developing and managing premier retail, office and residential properties throughout the United States in some of the nation's most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Oregon, Washington, Texas and Hawaii. The company's retail portfolio comprises approximately 3.1 million rentable square feet, and its office portfolio comprises approximately 2.7 million square feet. In addition, the company owns one mixed-use property (including approximately 97,000 rentable square feet of retail space and a 369-room all-suite hotel) and 2,112 multifamily units. In 2011, the company was formed to succeed to the real estate business of American Assets, Inc., a privately held corporation founded in 1967 and, as such, has significant experience, long-standing relationships and extensive knowledge of its core markets, submarkets and asset classes.

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