Sunrise Realty Trust (NASDAQ:SUNS) & Two Harbors Investments (NYSE:TWO) Critical Review

Sunrise Realty Trust (NASDAQ:SUNS) and Two Harbors Investments (NYSE:TWO) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, profitability, analyst recommendations, earnings, dividends and risk.

Earnings and Valuation

This table compares Sunrise Realty Trust and Two Harbors Investments”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sunrise Realty Trust	$21.57 million	4.69	$12.14 million	$0.97	7.72
Two Harbors Investments	$366.65 million	3.44	-$454.30 million	($0.74)	-16.20

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sunrise Realty Trust	53.33%	8.24%	5.03%
Two Harbors Investments	-6.09%	12.79%	1.44%

Dividends

Sunrise Realty Trust pays an annual dividend of $1.20 per share and has a dividend yield of 16.0%. Two Harbors Investments pays an annual dividend of $0.48 per share and has a dividend yield of 4.0%. Sunrise Realty Trust pays out 123.7% 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 pays out -64.9% of its earnings in the form of a dividend. Two Harbors Investments has raised its dividend for 1 consecutive years.

Analyst Recommendations

This is a summary of current ratings and price targets for Sunrise Realty Trust and Two Harbors Investments, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sunrise Realty Trust	1	2	0	0	1.67
Two Harbors Investments	1	5	0	1	2.14

Sunrise Realty Trust presently has a consensus target price of $8.00, indicating a potential upside of 6.81%. Two Harbors Investments has a consensus target price of $12.75, indicating a potential upside of 6.38%. Given Sunrise Realty Trust’s higher probable upside, equities research analysts plainly believe Sunrise Realty Trust is more favorable than Two Harbors Investments.

Volatility & Risk

Sunrise Realty Trust has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500. Comparatively, Two Harbors Investments has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500.

Institutional and Insider Ownership

64.2% of Two Harbors Investments shares are owned by institutional investors. 28.5% of Sunrise Realty Trust shares are owned by insiders. Comparatively, 0.7% of Two Harbors Investments shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Sunrise Realty Trust beats Two Harbors Investments on 9 of the 17 factors compared between the two stocks.

About Sunrise Realty Trust

Sunrise Realty Trust, Inc. engages in commercial real estate (CRE) lending business. It focuses on originating CRE debt investments and providing capital to borrowers and sponsors with transitional business plans collateralized by CRE assets. The company intends to create a diversified investment portfolio, targeting investments in senior mortgage loans, mezzanine loans, whole loans, B-notes, CMBS, and debt-like preferred equity securities across CRE asset classes. Sunrise Realty Trust, Inc. was incorporated in 2023 and is based in West Palm Beach, Florida.

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.