Critical Analysis: Adamas Trust (NASDAQ:ADAM) versus TPG RE Finance Trust (NYSE:TRTX)

TPG RE Finance Trust (NYSE:TRTX) and Adamas Trust (NASDAQ:ADAM) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, earnings, risk, profitability, analyst recommendations and dividends.

Volatility & Risk

TPG RE Finance Trust has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500. Comparatively, Adamas Trust has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500.

Earnings & Valuation

This table compares TPG RE Finance Trust and Adamas Trust”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TPG RE Finance Trust	$332.58 million	1.49	$60.32 million	$0.39	16.72
Adamas Trust	$601.95 million	0.98	$149.05 million	($0.57)	-11.47

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

Dividends

TPG RE Finance Trust pays an annual dividend of $0.96 per share and has a dividend yield of 14.7%. Adamas Trust pays an annual dividend of $1.20 per share and has a dividend yield of 18.3%. TPG RE Finance Trust pays out 246.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Adamas Trust pays out -210.5% of its earnings in the form of a dividend. Adamas Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and price targets for TPG RE Finance Trust and Adamas Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TPG RE Finance Trust	1	2	4	0	2.43
Adamas Trust	0	5	1	0	2.17

TPG RE Finance Trust currently has a consensus price target of $9.33, indicating a potential upside of 43.15%. Adamas Trust has a consensus price target of $9.25, indicating a potential upside of 41.44%. Given TPG RE Finance Trust’s stronger consensus rating and higher possible upside, equities research analysts plainly believe TPG RE Finance Trust is more favorable than Adamas Trust.

Insider and Institutional Ownership

57.1% of TPG RE Finance Trust shares are held by institutional investors. Comparatively, 54.9% of Adamas Trust shares are held by institutional investors. 3.0% of TPG RE Finance Trust shares are held by insiders. Comparatively, 2.0% of Adamas Trust shares are held 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.

Profitability

This table compares TPG RE Finance Trust and Adamas Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TPG RE Finance Trust	13.13%	5.21%	1.17%
Adamas Trust	-0.26%	15.77%	1.05%

Summary

TPG RE Finance Trust beats Adamas Trust on 11 of the 16 factors compared between the two stocks.

About TPG RE Finance Trust

TPG RE Finance Trust, Inc., a commercial real estate finance company, originates, acquires, and manages commercial mortgage loans and other commercial real estate-related debt instruments in the United States. It invests in commercial mortgage loans; subordinate mortgage interests, mezzanine loans, secured real estate securities, note financing, preferred equity, and miscellaneous debt instruments; and commercial real estate collateralized loan obligations and commercial mortgage-backed securities secured by properties primarily in the multifamily, life science, mixed-use, hospitality, self storage, industrial, and retail real estate sectors. 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. TPG RE Finance Trust, Inc. was incorporated in 2014 and is based in New York, New York.

About Adamas Trust

New York Mortgage Trust, Inc. acquires, invests in, finances, and manages mortgage-related single-family and multi-family residential assets in the United States. Its targeted investments include residential loans, second mortgages, and business purpose loans; structured multi-family property investments, such as preferred equity in, and mezzanine loans to owners of multi-family properties, as well as joint venture equity investments in multi-family properties; non-agency residential mortgage-backed securities (RMBS); agency RMBS; commercial mortgage-backed securities (CMBS); and other mortgage, residential housing, and credit-related assets. 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 incorporated in 2003 and is headquartered in New York, New York.