TPG RE Finance Trust (NYSE:TRTX) & ARMOUR Residential REIT (NYSE:ARR) Critical Survey

TPG RE Finance Trust (NYSE:TRTX) and ARMOUR Residential REIT (NYSE:ARR) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Dividends

TPG RE Finance Trust pays an annual dividend of $0.96 per share and has a dividend yield of 12.2%. ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 17.6%. TPG RE Finance Trust pays out 177.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ARMOUR Residential REIT pays out 77.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ARMOUR Residential REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

TPG RE Finance Trust has a beta of 1.41, suggesting that its share price is 41% more volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500.

Earnings and Valuation

This table compares TPG RE Finance Trust and ARMOUR Residential REIT”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TPG RE Finance Trust	$142.63 million	4.24	$60.32 million	$0.54	14.57
ARMOUR Residential REIT	$800.42 million	2.90	$322.69 million	$3.72	4.41

ARMOUR Residential REIT has higher revenue and earnings than TPG RE Finance Trust. ARMOUR Residential REIT is trading at a lower price-to-earnings ratio than TPG RE Finance Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings for TPG RE Finance Trust and ARMOUR Residential REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TPG RE Finance Trust	0	1	5	0	2.83
ARMOUR Residential REIT	1	2	2	0	2.20

TPG RE Finance Trust presently has a consensus target price of $10.00, indicating a potential upside of 27.06%. ARMOUR Residential REIT has a consensus target price of $18.50, indicating a potential upside of 12.87%. Given TPG RE Finance Trust’s stronger consensus rating and higher probable upside, equities analysts clearly believe TPG RE Finance Trust is more favorable than ARMOUR Residential REIT.

Profitability

This table compares TPG RE Finance Trust and ARMOUR Residential REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TPG RE Finance Trust	17.03%	6.85%	1.66%
ARMOUR Residential REIT	44.90%	15.10%	1.66%

Insider and Institutional Ownership

57.1% of TPG RE Finance Trust shares are owned by institutional investors. Comparatively, 54.2% of ARMOUR Residential REIT shares are owned by institutional investors. 3.0% of TPG RE Finance Trust shares are owned by company insiders. Comparatively, 0.2% of ARMOUR Residential REIT shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

TPG RE Finance Trust beats ARMOUR Residential REIT on 8 of the 15 factors compared between the two stocks.

About TPG RE Finance Trust

TPG RE Finance Trust, Inc., a commercial real estate finance company, originates, acquires, and manages commercial mortgage loans and other commercial real estate-related debt instruments in the United States. It invests in commercial mortgage loans; subordinate mortgage interests, mezzanine loans, secured real estate securities, note financing, preferred equity, and miscellaneous debt instruments; and commercial real estate collateralized loan obligations and commercial mortgage-backed securities secured by properties primarily in the multifamily, life science, mixed-use, hospitality, self storage, industrial, and retail real estate sectors. 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. TPG RE Finance Trust, Inc. was incorporated in 2014 and is based in New York, New York.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. Its securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans; and unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. 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. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.