Invesco Mortgage Capital (NYSE:IVR – Get Free Report) and Adamas Trust (NASDAQ:ADAM – Get Free Report) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, institutional ownership, risk and analyst recommendations.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for Invesco Mortgage Capital and Adamas Trust, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Invesco Mortgage Capital | 1 | 2 | 1 | 0 | 2.00 |
| Adamas Trust | 2 | 3 | 1 | 0 | 1.83 |
Invesco Mortgage Capital currently has a consensus price target of $8.38, indicating a potential upside of 66.34%. Adamas Trust has a consensus price target of $9.25, indicating a potential upside of 76.19%. Given Adamas Trust’s higher probable upside, analysts clearly believe Adamas Trust is more favorable than Invesco Mortgage Capital.
Insider & Institutional Ownership
40.5% of Invesco Mortgage Capital shares are owned by institutional investors. Comparatively, 54.9% of Adamas Trust shares are owned by institutional investors. 0.2% of Invesco Mortgage Capital shares are owned by company insiders. Comparatively, 2.0% of Adamas Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Dividends
Invesco Mortgage Capital pays an annual dividend of $1.44 per share and has a dividend yield of 28.6%. Adamas Trust pays an annual dividend of $1.20 per share and has a dividend yield of 22.9%. Invesco Mortgage Capital pays out -800.0% of its earnings in the form of a dividend. Adamas Trust pays out -210.5% 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. Invesco Mortgage Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares Invesco Mortgage Capital and Adamas Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Invesco Mortgage Capital | -8.49% | 26.75% | 2.80% |
| Adamas Trust | -0.26% | 15.77% | 1.05% |
Risk & Volatility
Invesco Mortgage Capital has a beta of 1.73, indicating that its stock price is 73% more volatile than the S&P 500. Comparatively, Adamas Trust has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500.
Valuation & Earnings
This table compares Invesco Mortgage Capital and Adamas Trust”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Invesco Mortgage Capital | $295.29 million | 1.86 | $101.28 million | ($0.18) | -27.97 |
| Adamas Trust | $601.95 million | 0.79 | $149.05 million | ($0.57) | -9.21 |
Adamas Trust has higher revenue and earnings than Invesco Mortgage Capital. Invesco Mortgage Capital is trading at a lower price-to-earnings ratio than Adamas Trust, indicating that it is currently the more affordable of the two stocks.
Summary
Invesco Mortgage Capital beats Adamas Trust on 8 of the 15 factors compared between the two stocks.
About Invesco Mortgage Capital
Invesco Mortgage Capital Inc. is a real estate investment trust that invests in mortgage-related assets, with a portfolio focused on residential and commercial mortgage-backed securities and mortgage loans. Its investments include securities backed by U.S. government agencies as well as non-agency securities. Founded in 2009, the company is externally managed by Invesco Advisers, Inc., an investment adviser affiliated with Invesco Ltd. Its activities are primarily focused on U.S. mortgage markets.
About Adamas Trust
Adamas Trust, Inc. is a real estate investment trust focused on commercial real estate lending. Through its lending and investment activities, the company provides financing for commercial properties and invests in commercial real estate-related assets. The company was formerly known as ACRES Commercial Realty Corp. Its portfolio and lending activities have focused primarily on commercial real estate in the United States, including properties undergoing renovation, repositioning or other transitions.
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