Critical Review: Arbor Realty Trust (NYSE:ABR) versus AGNC Investment (NASDAQ:AGNCP)

AGNC Investment (NASDAQ:AGNCP) and Arbor Realty Trust (NYSE:ABR) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, risk, earnings, dividends, analyst recommendations, institutional ownership and profitability.

Profitability

This table compares AGNC Investment and Arbor Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AGNC Investment	N/A	N/A	N/A
Arbor Realty Trust	6.24%	7.38%	1.22%

Analyst Ratings

This is a summary of recent ratings and price targets for AGNC Investment and Arbor Realty Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AGNC Investment	0	0	0	0	0.00
Arbor Realty Trust	4	1	1	0	1.50

Arbor Realty Trust has a consensus price target of $6.00, suggesting a potential upside of 17.99%. Given Arbor Realty Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Arbor Realty Trust is more favorable than AGNC Investment.

Insider & Institutional Ownership

57.3% of Arbor Realty Trust shares are owned by institutional investors. 4.2% of Arbor Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares AGNC Investment and Arbor Realty Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AGNC Investment	$2.40 billion	N/A	N/A	N/A	N/A
Arbor Realty Trust	$940.01 million	1.01	$148.80 million	$0.07	72.64

Arbor Realty Trust has lower revenue, but higher earnings than AGNC Investment.

Dividends

AGNC Investment pays an annual dividend of $1.53 per share and has a dividend yield of 6.0%. Arbor Realty Trust pays an annual dividend of $0.68 per share and has a dividend yield of 13.4%. Arbor Realty Trust pays out 971.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Arbor Realty Trust beats AGNC Investment on 9 of the 11 factors compared between the two stocks.

About AGNC Investment

AGNC Investment Corp. provides private capital to housing market in the United States. It invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by the United States government-sponsored enterprise or by the United States government agency. 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 American Capital Agency Corp. and changed its name to AGNC Investment Corp. in September 2016. AGNC Investment Corp. was incorporated in 2008 and is headquartered in Bethesda, Maryland.

About Arbor Realty Trust

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates through Structured Business and Agency Business segments. It primarily invests in bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. In addition, the company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. 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. Arbor Realty Trust, Inc. was incorporated in 2003 and is headquartered in Uniondale, New York.