PennyMac Mortgage Investment Trust (NYSE:PMT) and Angel Oak Mortgage REIT (NYSE:AOMR) Critical Review

PennyMac Mortgage Investment Trust (NYSE:PMT) and Angel Oak Mortgage REIT (NYSE:AOMR) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, institutional ownership, analyst recommendations, earnings, dividends, valuation and profitability.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for PennyMac Mortgage Investment Trust and Angel Oak Mortgage REIT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PennyMac Mortgage Investment Trust	0	5	2	0	2.29
Angel Oak Mortgage REIT	0	3	4	0	2.57

PennyMac Mortgage Investment Trust currently has a consensus price target of $13.88, suggesting a potential upside of 10.87%. Angel Oak Mortgage REIT has a consensus price target of $11.45, suggesting a potential upside of 32.68%. Given Angel Oak Mortgage REIT’s stronger consensus rating and higher probable upside, analysts clearly believe Angel Oak Mortgage REIT is more favorable than PennyMac Mortgage Investment Trust.

Earnings & Valuation

This table compares PennyMac Mortgage Investment Trust and Angel Oak Mortgage REIT”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PennyMac Mortgage Investment Trust	$334.19 million	3.26	$160.98 million	$0.91	13.75
Angel Oak Mortgage REIT	$110.43 million	1.95	$28.75 million	$0.71	12.15

PennyMac Mortgage Investment Trust has higher revenue and earnings than Angel Oak Mortgage REIT. Angel Oak Mortgage REIT 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.

Dividends

PennyMac Mortgage Investment Trust pays an annual dividend of $1.60 per share and has a dividend yield of 12.8%. Angel Oak Mortgage REIT pays an annual dividend of $1.28 per share and has a dividend yield of 14.8%. PennyMac Mortgage Investment Trust pays out 175.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Angel Oak Mortgage REIT pays out 180.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares PennyMac Mortgage Investment Trust and Angel Oak Mortgage REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PennyMac Mortgage Investment Trust	37.92%	9.01%	0.76%
Angel Oak Mortgage REIT	12.93%	6.42%	0.63%

Volatility and Risk

PennyMac Mortgage Investment Trust has a beta of 1.28, indicating that its stock price is 28% more volatile than the S&P 500. Comparatively, Angel Oak Mortgage REIT has a beta of 1.36, indicating that its stock price is 36% more volatile than the S&P 500.

Institutional and Insider Ownership

67.4% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. Comparatively, 80.2% of Angel Oak Mortgage REIT shares are owned by institutional investors. 0.9% of PennyMac Mortgage Investment Trust shares are owned by company insiders. Comparatively, 2.5% of Angel Oak Mortgage REIT shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

PennyMac Mortgage Investment Trust beats Angel Oak Mortgage REIT on 9 of the 16 factors compared between the two stocks.

About PennyMac Mortgage Investment Trust

PennyMac Mortgage Investment Trust, through its subsidiary, primarily invests in mortgage-related assets in the United States. The company operates through: Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production segments. Its Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, subordinate mortgage-backed securities (MBS), distressed loans, and real estate. The company's Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency MBS, as well as related interest rate hedging activities. Its Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. The company primarily sells its loans to government-sponsored entities or PennyMac Loan Services, LLC. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its shareholders. The company was incorporated in 2009 and is headquartered in Westlake Village, California.

About Angel Oak Mortgage REIT

Angel Oak Mortgage REIT, Inc., a real estate finance company, focuses on acquiring and investing in first lien non- qualified mortgage loans and other mortgage-related assets in the United States mortgage market. It offers investment securities; residential mortgage loans; and commercial mortgage loans. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2018 and is headquartered in Atlanta, Georgia.