Contrasting Seven Hills Realty Trust (NASDAQ:SEVN) & Two Harbors Investments (NYSE:TWO)

Two Harbors Investments (NYSE:TWO) and Seven Hills Realty Trust (NASDAQ:SEVN) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, risk, valuation, institutional ownership, analyst recommendations and earnings.

Insider & Institutional Ownership

64.2% of Two Harbors Investments shares are held by institutional investors. 0.7% of Two Harbors Investments shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Two Harbors Investments and Seven Hills Realty Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Two Harbors Investments	$412.00 million	3.08	-$454.30 million	($3.82)	-3.16
Seven Hills Realty Trust	$24.93 million	N/A	N/A	$1.46	5.17

Seven Hills Realty Trust has lower revenue, but higher earnings than Two Harbors Investments. Two Harbors Investments is trading at a lower price-to-earnings ratio than Seven Hills Realty Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for Two Harbors Investments and Seven Hills Realty Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Two Harbors Investments	2	4	0	1	2.00
Seven Hills Realty Trust	0	1	5	0	2.83

Two Harbors Investments currently has a consensus target price of $12.75, indicating a potential upside of 5.50%. Seven Hills Realty Trust has a consensus target price of $10.38, indicating a potential upside of 37.60%. Given Seven Hills Realty Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Seven Hills Realty Trust is more favorable than Two Harbors Investments.

Dividends

Two Harbors Investments pays an annual dividend of $1.36 per share and has a dividend yield of 11.3%. Seven Hills Realty Trust pays an annual dividend of $1.12 per share and has a dividend yield of 14.9%. Two Harbors Investments pays out -35.6% of its earnings in the form of a dividend. Seven Hills Realty Trust pays out 76.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Two Harbors Investments has increased its dividend for 1 consecutive years.

Profitability

This table compares Two Harbors Investments and Seven Hills Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Two Harbors Investments	-6.09%	12.79%	1.44%
Seven Hills Realty Trust	N/A	N/A	N/A

Summary

Two Harbors Investments beats Seven Hills Realty Trust on 8 of the 15 factors compared between the two stocks.

About Two Harbors Investments

Two Harbors Investment Corp. invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through RoundPoint in the United States. The company target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, hybrid mortgage loans, or derivatives; and other assets, such as financial and mortgage-related assets, including non-agency securities and non-hedging transactions. It qualifies as a REIT for federal income tax purposes. As a REIT, the company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in St. Louis Park, Minnesota.

About Seven Hills Realty Trust

Seven Hills Realty Trust, a real estate investment trust, focuses on originating and investing in first mortgage loans secured by middle market and transitional commercial real estate in the United States. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. The company was formerly known as RMR Mortgage Trust. Seven Hills Realty Trust was incorporated in 2008 and is headquartered in Newton, Massachusetts.