Invesco Mortgage Capital (IVR) versus Chimera Investment Corporation (CIM) Critical Contrast

Invesco Mortgage Capital (NYSE: IVR) and Chimera Investment Corporation (NYSE:CIM) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, risk, analyst recommendations, profitabiliy, valuation and dividends.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Invesco Mortgage Capital and Chimera Investment Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Invesco Mortgage Capital 0 4 2 0 2.33
Chimera Investment Corporation 0 5 1 0 2.17

Invesco Mortgage Capital currently has a consensus price target of $16.50, suggesting a potential downside of 3.62%. Chimera Investment Corporation has a consensus price target of $16.70, suggesting a potential downside of 14.14%. Given Invesco Mortgage Capital’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Invesco Mortgage Capital is more favorable than Chimera Investment Corporation.

Volatility & Risk

Invesco Mortgage Capital has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500. Comparatively, Chimera Investment Corporation has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Institutional & Insider Ownership

64.4% of Invesco Mortgage Capital shares are owned by institutional investors. Comparatively, 55.7% of Chimera Investment Corporation shares are owned by institutional investors. 0.3% of Invesco Mortgage Capital shares are owned by insiders. Comparatively, 0.6% of Chimera Investment Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Invesco Mortgage Capital pays an annual dividend of $1.60 per share and has a dividend yield of 9.3%. Chimera Investment Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 10.3%. Invesco Mortgage Capital pays out 41.8% of its earnings in the form of a dividend. Chimera Investment Corporation pays out 60.2% 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. Chimera Investment Corporation has raised its dividend for 2 consecutive years. Chimera Investment Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Invesco Mortgage Capital and Chimera Investment Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Invesco Mortgage Capital 64.31% 9.18% 1.11%
Chimera Investment Corporation 64.18% 14.14% 2.49%

Valuation & Earnings

This table compares Invesco Mortgage Capital and Chimera Investment Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Invesco Mortgage Capital $549.91 million 3.47 $427.44 million $3.83 4.47
Chimera Investment Corporation $895.85 million 4.08 $623.43 million $3.32 5.86

Chimera Investment Corporation has higher revenue and earnings than Invesco Mortgage Capital. Invesco Mortgage Capital is trading at a lower price-to-earnings ratio than Chimera Investment Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Chimera Investment Corporation beats Invesco Mortgage Capital on 9 of the 16 factors compared between the two stocks.

Invesco Mortgage Capital Company Profile

Invesco Mortgage Capital Inc. is a holding company, which conducts its businesses through IAS Operating Partnership LP (the Operating Partnership) and subsidiaries. The Company’s objective is to provide risk-adjusted returns to its investors through dividends and through capital appreciation. It invests in residential mortgage-backed securities that are guaranteed by the United States Government agency, such as the Government National Mortgage Association or a federally chartered corporation, such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation (collectively Agency RMBS); RMBS that are not guaranteed by the United States Government agency; Credit risk transfer securities that are unsecured obligations issued by government-sponsored enterprises; commercial mortgage-backed securities; residential and commercial mortgage loans, and other real estate-related financing arrangements. It is externally managed and advised by Invesco Advisers, Inc.

Chimera Investment Corporation Company Profile

Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.

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