MFA Financial (NYSE:MFA) and Adamas Trust (NASDAQ:ADAM) Head-To-Head Analysis

Adamas Trust (NASDAQ:ADAM) and MFA Financial (NYSE:MFA) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, earnings, risk and analyst recommendations.

Analyst Ratings

This is a summary of recent recommendations for Adamas Trust and MFA Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Adamas Trust	0	4	1	1	2.50
MFA Financial	0	3	4	0	2.57

Adamas Trust presently has a consensus price target of $9.50, indicating a potential downside of 2.06%. MFA Financial has a consensus price target of $10.46, indicating a potential upside of 17.77%. Given MFA Financial’s stronger consensus rating and higher possible upside, analysts plainly believe MFA Financial is more favorable than Adamas Trust.

Dividends

Adamas Trust pays an annual dividend of $1.08 per share and has a dividend yield of 11.1%. MFA Financial pays an annual dividend of $1.44 per share and has a dividend yield of 16.2%. Adamas Trust pays out 64.3% of its earnings in the form of a dividend. MFA Financial pays out 144.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MFA Financial has increased its dividend for 1 consecutive years. MFA Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Adamas Trust has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500. Comparatively, MFA Financial has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.

Institutional & Insider Ownership

54.9% of Adamas Trust shares are held by institutional investors. Comparatively, 65.3% of MFA Financial shares are held by institutional investors. 2.0% of Adamas Trust shares are held by insiders. Comparatively, 1.0% of MFA Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Adamas Trust and MFA Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Adamas Trust	29.82%	14.72%	1.04%
MFA Financial	19.38%	7.58%	1.05%

Valuation and Earnings

This table compares Adamas Trust and MFA Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Adamas Trust	$601.95 million	1.45	$149.05 million	$1.68	5.77
MFA Financial	$745.06 million	1.20	$176.78 million	$1.00	8.88

MFA Financial has higher revenue and earnings than Adamas Trust. Adamas Trust is trading at a lower price-to-earnings ratio than MFA Financial, indicating that it is currently the more affordable of the two stocks.

Summary

MFA Financial beats Adamas Trust on 11 of the 18 factors compared between the two stocks.

About Adamas Trust

New York Mortgage Trust, Inc. acquires, invests in, finances, and manages mortgage-related single-family and multi-family residential assets in the United States. Its targeted investments include residential loans, second mortgages, and business purpose loans; structured multi-family property investments, such as preferred equity in, and mezzanine loans to owners of multi-family properties, as well as joint venture equity investments in multi-family properties; non-agency residential mortgage-backed securities (RMBS); agency RMBS; commercial mortgage-backed securities (CMBS); and other mortgage, residential housing, and credit-related assets. 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 2003 and is headquartered in New York, New York.

About MFA Financial

MFA Financial, Inc., together with its subsidiaries, operates as a real estate investment trust in the United States. It invests in residential mortgage securities, including non-agency mortgage-backed securities, agency MBS, and credit risk transfer securities; residential whole loans, including purchased performing loans, purchased credit deteriorated, and non-performing loans; and mortgage servicing rights related assets. The company was incorporated in 1997 and is based in New York, New York.