Invesco Mortgage Capital (NYSE:IVR – Get Free Report) and Adamas Trust (NASDAQ:ADAM – Get Free Report) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.
Valuation and Earnings
This table compares Invesco Mortgage Capital and Adamas Trust”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Invesco Mortgage Capital | $295.29 million | 1.94 | $101.28 million | ($0.18) | -29.64 |
| Adamas Trust | $601.95 million | 0.82 | $149.05 million | ($0.57) | -9.55 |
Adamas Trust has higher revenue and earnings than Invesco Mortgage Capital. Invesco Mortgage Capital is trading at a lower price-to-earnings ratio than Adamas Trust, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Invesco Mortgage Capital has a beta of 1.73, meaning that its share price is 73% more volatile than the S&P 500. Comparatively, Adamas Trust has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500.
Dividends
Invesco Mortgage Capital pays an annual dividend of $1.44 per share and has a dividend yield of 27.0%. Adamas Trust pays an annual dividend of $1.20 per share and has a dividend yield of 22.0%. Invesco Mortgage Capital pays out -800.0% of its earnings in the form of a dividend. Adamas Trust pays out -210.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Invesco Mortgage Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider & Institutional Ownership
40.5% of Invesco Mortgage Capital shares are owned by institutional investors. Comparatively, 54.9% of Adamas Trust shares are owned by institutional investors. 0.2% of Invesco Mortgage Capital shares are owned by insiders. Comparatively, 2.0% of Adamas Trust shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Analyst Recommendations
This is a breakdown of recent ratings and price targets for Invesco Mortgage Capital and Adamas Trust, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Invesco Mortgage Capital | 0 | 3 | 1 | 0 | 2.25 |
| Adamas Trust | 2 | 3 | 1 | 0 | 1.83 |
Invesco Mortgage Capital presently has a consensus price target of $8.38, suggesting a potential upside of 56.98%. Adamas Trust has a consensus price target of $9.25, suggesting a potential upside of 69.88%. Given Adamas Trust’s higher probable upside, analysts clearly believe Adamas Trust is more favorable than Invesco Mortgage Capital.
Profitability
This table compares Invesco Mortgage Capital and Adamas Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Invesco Mortgage Capital | -8.49% | 26.75% | 2.80% |
| Adamas Trust | -0.26% | 15.77% | 1.05% |
Summary
Invesco Mortgage Capital beats Adamas Trust on 8 of the 15 factors compared between the two stocks.
About Invesco Mortgage Capital
Invesco Mortgage Capital Inc. (NYSE: IVR) is a real estate investment trust that invests primarily in mortgage-related assets. The company focuses on residential and commercial mortgage-backed securities, including securities issued or guaranteed by U.S. government-sponsored enterprises and agencies, as well as non-agency mortgage-backed securities and other mortgage-related investments. Invesco Mortgage Capital seeks to generate income from its investment portfolio through interest payments and other returns associated with mortgage assets.
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.
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