Two Harbors Investments (NYSE:TWO) vs. Blackstone Mortgage Trust (NYSE:BXMT) Financial Analysis

Blackstone Mortgage Trust (NYSE:BXMT) and Two Harbors Investments (NYSE:TWO) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.

Profitability

This table compares Blackstone Mortgage Trust and Two Harbors Investments’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Blackstone Mortgage Trust	7.53%	4.06%	0.75%
Two Harbors Investments	-44.10%	11.92%	1.32%

Analyst Ratings

This is a summary of current recommendations and price targets for Blackstone Mortgage Trust and Two Harbors Investments, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Blackstone Mortgage Trust	0	4	2	0	2.33
Two Harbors Investments	1	5	3	1	2.40

Blackstone Mortgage Trust presently has a consensus target price of $20.00, suggesting a potential upside of 6.70%. Two Harbors Investments has a consensus target price of $12.36, suggesting a potential upside of 27.33%. Given Two Harbors Investments’ stronger consensus rating and higher probable upside, analysts plainly believe Two Harbors Investments is more favorable than Blackstone Mortgage Trust.

Volatility and Risk

Blackstone Mortgage Trust has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500. Comparatively, Two Harbors Investments has a beta of 1.3, indicating that its share price is 30% more volatile than the S&P 500.

Institutional and Insider Ownership

64.2% of Blackstone Mortgage Trust shares are owned by institutional investors. Comparatively, 64.2% of Two Harbors Investments shares are owned by institutional investors. 1.0% of Blackstone Mortgage Trust shares are owned by company insiders. Comparatively, 0.7% of Two Harbors Investments shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Blackstone Mortgage Trust and Two Harbors Investments”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Blackstone Mortgage Trust	$507.96 million	6.19	-$204.09 million	$0.62	30.23
Two Harbors Investments	$394.99 million	2.56	$298.17 million	($2.50)	-3.88

Two Harbors Investments has lower revenue, but higher earnings than Blackstone Mortgage Trust. Two Harbors Investments is trading at a lower price-to-earnings ratio than Blackstone Mortgage Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Blackstone Mortgage Trust pays an annual dividend of $1.88 per share and has a dividend yield of 10.0%. Two Harbors Investments pays an annual dividend of $1.36 per share and has a dividend yield of 14.0%. Blackstone Mortgage Trust pays out 303.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Two Harbors Investments pays out -54.4% of its earnings in the form of a dividend. Two Harbors Investments has increased its dividend for 1 consecutive years. Two Harbors Investments is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Two Harbors Investments beats Blackstone Mortgage Trust on 12 of the 18 factors compared between the two stocks.

About Blackstone Mortgage Trust

Blackstone Mortgage Trust, Inc., a real estate finance company, originates senior loans collateralized by commercial properties in North America, Europe, and Australia. The company originates and acquires senior floating rate mortgage loans that are secured by a first-priority mortgage on commercial real estate assets. It operates as a real estate investment trust for federal income tax purposes. The company was formerly known as Capital Trust, Inc. and changed its name to Blackstone Mortgage Trust, Inc. in May 2013. Blackstone Mortgage Trust, Inc. was incorporated in 1998 and is headquartered in New York, New York.

About Two Harbors Investments

Two Harbors Investment Corp. invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through RoundPoint in the United States. The company target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, hybrid mortgage loans, or derivatives; and other assets, such as financial and mortgage-related assets, including non-agency securities and non-hedging transactions. It qualifies as a REIT for federal income tax purposes. As a REIT, the company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in St. Louis Park, Minnesota.