Reviewing BrightSpire Capital (NYSE:BRSP) and Invesco Mortgage Capital (NYSE:IVR)

BrightSpire Capital (NYSE:BRSP) and Invesco Mortgage Capital (NYSE:IVR) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, institutional ownership, risk and valuation.

Dividends

BrightSpire Capital pays an annual dividend of $0.64 per share and has a dividend yield of 11.5%. Invesco Mortgage Capital pays an annual dividend of $1.44 per share and has a dividend yield of 18.4%. BrightSpire Capital pays out -237.0% of its earnings in the form of a dividend. Invesco Mortgage Capital pays out 194.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a summary of recent recommendations for BrightSpire Capital and Invesco Mortgage Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BrightSpire Capital	2	0	4	0	2.33
Invesco Mortgage Capital	2	1	1	0	1.75

BrightSpire Capital currently has a consensus target price of $6.75, suggesting a potential upside of 21.51%. Invesco Mortgage Capital has a consensus target price of $8.25, suggesting a potential upside of 5.70%. Given BrightSpire Capital’s stronger consensus rating and higher possible upside, research analysts plainly believe BrightSpire Capital is more favorable than Invesco Mortgage Capital.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
BrightSpire Capital	-24.16%	7.46%	2.03%
Invesco Mortgage Capital	20.50%	28.12%	2.90%

Volatility and Risk

BrightSpire Capital has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500. Comparatively, Invesco Mortgage Capital has a beta of 1.61, indicating that its share price is 61% more volatile than the S&P 500.

Earnings and Valuation

This table compares BrightSpire Capital and Invesco Mortgage Capital”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BrightSpire Capital	$194.89 million	3.71	-$31.15 million	($0.27)	-20.57
Invesco Mortgage Capital	$295.29 million	2.45	$101.28 million	$0.74	10.55

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

Insider and Institutional Ownership

56.6% of BrightSpire Capital shares are owned by institutional investors. Comparatively, 40.5% of Invesco Mortgage Capital shares are owned by institutional investors. 2.8% of BrightSpire Capital shares are owned by insiders. Comparatively, 0.2% of Invesco Mortgage Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Invesco Mortgage Capital beats BrightSpire Capital on 9 of the 16 factors compared between the two stocks.

About BrightSpire Capital

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States and Europe. The company operates through Senior and Mezzanine Loans and Preferred Equity; Net Leased and Other Real Estate; and Corporate and Other segments. It focuses on originating, acquiring, financing, and managing a diversified portfolio of CRE debt investments consisting of first mortgage loans, senior loans, debt securities, mezzanine loans, and preferred equity investments, as well as net leased properties. 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 Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.

About Invesco Mortgage Capital

Invesco Mortgage Capital Inc. operates as a real estate investment trust (REIT) that invests, finances, and manages mortgage-backed securities and other mortgage-related assets in the United States. It invests in residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS) that are guaranteed by a U.S. government agency or federally chartered corporation; RMBS and CMBS that are not issued or guaranteed by the United States government agency or federally chartered corporation; the United States treasury securities; real estate-related financing arrangements; to-be-announced securities forward contracts to purchase RMBS; and commercial mortgage loans. It has elected to be taxed as a REIT and would be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2008 and is headquartered in Atlanta, Georgia.