Head-To-Head Contrast: Anworth Mortgage Asset (ANH) and Farmland Partners (FPI)

Anworth Mortgage Asset (NYSE: ANH) and Farmland Partners (NYSE:FPI) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, institutional ownership, dividends, analyst recommendations, risk and earnings.

Analyst Recommendations

This is a summary of current ratings and target prices for Anworth Mortgage Asset and Farmland Partners, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Anworth Mortgage Asset 0 1 0 0 2.00
Farmland Partners 0 4 1 0 2.20

Anworth Mortgage Asset presently has a consensus target price of $6.00, suggesting a potential upside of 8.89%. Farmland Partners has a consensus target price of $9.56, suggesting a potential upside of 5.08%. Given Anworth Mortgage Asset’s higher probable upside, equities research analysts clearly believe Anworth Mortgage Asset is more favorable than Farmland Partners.

Valuation & Earnings

This table compares Anworth Mortgage Asset and Farmland Partners’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Anworth Mortgage Asset $52.04 million 10.39 $22.49 million $0.47 11.72
Farmland Partners $31.00 million 9.49 $4.30 million $0.19 47.90

Anworth Mortgage Asset has higher revenue and earnings than Farmland Partners. Anworth Mortgage Asset is trading at a lower price-to-earnings ratio than Farmland Partners, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

56.3% of Anworth Mortgage Asset shares are owned by institutional investors. Comparatively, 41.0% of Farmland Partners shares are owned by institutional investors. 1.9% of Anworth Mortgage Asset shares are owned by insiders. Comparatively, 2.8% of Farmland Partners shares are owned by 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.

Risk & Volatility

Anworth Mortgage Asset has a beta of 0.19, suggesting that its stock price is 81% less volatile than the S&P 500. Comparatively, Farmland Partners has a beta of 0.21, suggesting that its stock price is 79% less volatile than the S&P 500.

Dividends

Anworth Mortgage Asset pays an annual dividend of $0.60 per share and has a dividend yield of 10.9%. Farmland Partners pays an annual dividend of $0.51 per share and has a dividend yield of 5.6%. Anworth Mortgage Asset pays out 127.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Farmland Partners pays out 268.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Anworth Mortgage Asset has raised its dividend for 2 consecutive years and Farmland Partners has raised its dividend for 2 consecutive years. Anworth Mortgage Asset is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Anworth Mortgage Asset and Farmland Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Anworth Mortgage Asset 37.57% 8.84% 0.95%
Farmland Partners 15.89% 2.05% 0.74%

Summary

Anworth Mortgage Asset beats Farmland Partners on 11 of the 16 factors compared between the two stocks.

Anworth Mortgage Asset Company Profile

Anworth Mortgage Asset Corporation is a real estate investment trust (REIT). The Company’s investment objective is to provide risk-adjusted total returns to its stockholders over the long-term primarily through dividends and secondarily through capital appreciation. Its strategy is to invest in residential mortgage-backed securities (MBS) (both Agency MBS and Non-Agency MBS), residential mortgage loans and residential rental properties. Its principal business objective is to generate net income for distribution to its stockholders primarily based upon the spread between the interest income on its mortgage assets and its borrowing costs to finance its acquisition of those assets. The Company finances residential mortgage loans through asset-backed securities, which are issued by the consolidated securitization trusts. The Company is engaged in investing in, financing and managing a portfolio of residential mortgage-backed securities and residential mortgage loans.

Farmland Partners Company Profile

Farmland Partners, Inc. is an internally managed real estate company. The Company owns and seeks to acquire farmland located in agricultural markets throughout North America. The Company is the sole member of the general partner of Farmland Partners Operating Partnership, LP (the Operating Partnership). All of the Company’s assets are held by, and its operations are primarily conducted through, the Operating Partnership and the subsidiaries of the Operating Partnership. The Company’s principal investment focus is on farmland located in agricultural markets throughout North America, however, it may seek to acquire farmland outside of North America. It also may acquire properties related to farming, such as grain storage facilities, grain elevators, feedlots, cold storage facilities, processing plants and distribution centers, as well as livestock farms or ranches. As of December 31, 2016, the Company owned approximately 115,489 acres, as well as eight grain storage facilities.

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