Financial Analysis: Hunt Companies Finance Trust (HCFT) and ARBOR RLTY TR I/SH (ABR)

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Hunt Companies Finance Trust (NYSE:HCFT) and ARBOR RLTY TR I/SH (NYSE:ABR) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Insider and Institutional Ownership

38.7% of Hunt Companies Finance Trust shares are held by institutional investors. Comparatively, 48.0% of ARBOR RLTY TR I/SH shares are held by institutional investors. 0.9% of Hunt Companies Finance Trust shares are held by insiders. Comparatively, 14.6% of ARBOR RLTY TR I/SH shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Hunt Companies Finance Trust and ARBOR RLTY TR I/SH’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hunt Companies Finance Trust -10.76% 7.32% 0.76%
ARBOR RLTY TR I/SH 51.33% 14.74% 3.02%

Volatility and Risk

Hunt Companies Finance Trust has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500. Comparatively, ARBOR RLTY TR I/SH has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for Hunt Companies Finance Trust and ARBOR RLTY TR I/SH, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hunt Companies Finance Trust 0 0 1 0 3.00
ARBOR RLTY TR I/SH 1 2 2 0 2.20

Hunt Companies Finance Trust currently has a consensus price target of $3.75, indicating a potential upside of 6.53%. ARBOR RLTY TR I/SH has a consensus price target of $11.89, indicating a potential downside of 12.91%. Given Hunt Companies Finance Trust’s stronger consensus rating and higher probable upside, research analysts plainly believe Hunt Companies Finance Trust is more favorable than ARBOR RLTY TR I/SH.

Dividends

Hunt Companies Finance Trust pays an annual dividend of $0.28 per share and has a dividend yield of 8.0%. ARBOR RLTY TR I/SH pays an annual dividend of $1.08 per share and has a dividend yield of 7.9%. Hunt Companies Finance Trust pays out -90.3% of its earnings in the form of a dividend. ARBOR RLTY TR I/SH pays out 89.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ARBOR RLTY TR I/SH has increased its dividend for 7 consecutive years. Hunt Companies Finance Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Hunt Companies Finance Trust and ARBOR RLTY TR I/SH’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hunt Companies Finance Trust $58.96 million 1.41 -$5.47 million ($0.31) -11.35
ARBOR RLTY TR I/SH $251.77 million 4.66 $115.86 million $1.21 11.28

ARBOR RLTY TR I/SH has higher revenue and earnings than Hunt Companies Finance Trust. Hunt Companies Finance Trust is trading at a lower price-to-earnings ratio than ARBOR RLTY TR I/SH, indicating that it is currently the more affordable of the two stocks.

Summary

ARBOR RLTY TR I/SH beats Hunt Companies Finance Trust on 11 of the 17 factors compared between the two stocks.

Hunt Companies Finance Trust Company Profile

Hunt Companies Finance Trust, Inc., a real estate specialty finance company, focuses on investing in portfolio mortgage-backed securities (MBS), mortgages, and other real estate related assets. It invests in agency and non-agency residential MBS, multi-family MBS, mortgage-servicing rights, and other mortgage-related investments. The company is qualified as a real estate investment trust (REIT) under the Internal Revenue Code. As a REIT, it would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Five Oaks Investment Corp. and changed its name to Hunt Companies Finance Trust, Inc. in May 2018. Hunt Companies Finance Trust, Inc. was founded in 2012 and is headquartered in New York, New York.

ARBOR RLTY TR I/SH Company Profile

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily and commercial real estate markets. The company operates in two segments, Structured Business and Agency Business. It primarily invests in real estate-related bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related notes and various mortgage-related securities. The company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower's equity in a transaction; and junior participation financing in the form of a junior participating interest in the senior debt. In addition, it underwrites, originates, sells, and services multifamily 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 founded in 2003 and is headquartered in Uniondale, New York.

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