Rithm Capital (NYSE:RITM) vs. Lument Finance Trust (NYSE:LFT) Head to Head Analysis

Lument Finance Trust (NYSE:LFT) and Rithm Capital (NYSE:RITM) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their dividends, risk, analyst recommendations, earnings, profitability, institutional ownership and valuation.

Analyst Ratings

This is a breakdown of recent recommendations for Lument Finance Trust and Rithm Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lument Finance Trust	1	0	0	0	1.00
Rithm Capital	0	1	10	0	2.91

Rithm Capital has a consensus target price of $13.15, indicating a potential upside of 34.80%. Given Rithm Capital’s stronger consensus rating and higher possible upside, analysts plainly believe Rithm Capital is more favorable than Lument Finance Trust.

Volatility & Risk

Lument Finance Trust has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500. Comparatively, Rithm Capital has a beta of 1.12, suggesting that its share price is 12% more volatile than the S&P 500.

Earnings and Valuation

This table compares Lument Finance Trust and Rithm Capital”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lument Finance Trust	$79.00 million	0.44	-$2.74 million	($3.60)	-1.85
Rithm Capital	$4.59 billion	1.19	$681.45 million	$0.60	16.26

Rithm Capital has higher revenue and earnings than Lument Finance Trust. Lument Finance Trust is trading at a lower price-to-earnings ratio than Rithm Capital, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Lument Finance Trust and Rithm Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lument Finance Trust	-18.00%	0.86%	0.12%
Rithm Capital	9.20%	19.86%	2.84%

Dividends

Lument Finance Trust pays an annual dividend of $1.60 per share and has a dividend yield of 24.0%. Rithm Capital pays an annual dividend of $1.00 per share and has a dividend yield of 10.3%. Lument Finance Trust pays out -44.4% of its earnings in the form of a dividend. Rithm Capital pays out 166.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lument Finance Trust has raised its dividend for 2 consecutive years. Lument Finance Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

19.5% of Lument Finance Trust shares are held by institutional investors. Comparatively, 44.9% of Rithm Capital shares are held by institutional investors. 3.3% of Lument Finance Trust shares are held by insiders. Comparatively, 0.6% of Rithm Capital shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Rithm Capital beats Lument Finance Trust on 13 of the 17 factors compared between the two stocks.

About Lument Finance Trust

Lument Finance Trust, Inc., a real estate investment trust, focuses on investing in, financing, and managing a portfolio of commercial real estate (CRE) debt investments in the United States. The company primarily invests in transitional floating rate CRE mortgage loans on middle market multi-family assets; and other CRE -related investments, including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans, and other CRE debt instruments. Lument Finance Trust, Inc. is qualified as a real estate investment trust (REIT) under the Internal Revenue Code of 1986. 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 Hunt Companies Finance Trust, Inc. and changed its name to Lument Finance Trust, Inc. in December 2020. Lument Finance Trust, Inc. was incorporated in 2012 and is headquartered in New York, New York.

About Rithm Capital

Rithm Capital Corp. operates as an asset manager focused on real estate, credit, and financial services. It operates through Origination and Servicing, Investment Portfolio, Mortgage Loans Receivable, and Asset Management segments. Its investment portfolio primarily comprises of mortgage servicing rights (MSR), and MSR financing receivables, title, appraisal and property preservation, excess MSRs, and services advance investments; real estate securities, call rights, SFR properties, and residential mortgage loans; consumer and business purpose loans; and asset management related investments. 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 formerly known as New Residential Investment Corp. and changed its name to Rithm Capital Corp. in August 2022. Rithm Capital Corp. was incorporated in 2011 and is based in New York, New York.