PennyMac Mortgage Investment Trust (NYSE:PMT) & AG Mortgage Investment Trust (NYSE:MITT) Critical Analysis
by Michael Walen · The Markets DailyPennyMac Mortgage Investment Trust (NYSE:PMT – Get Free Report) and AG Mortgage Investment Trust (NYSE:MITT – Get Free Report) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, risk, profitability, institutional ownership, earnings and dividends.
Valuation and Earnings
This table compares PennyMac Mortgage Investment Trust and AG Mortgage Investment Trust”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| PennyMac Mortgage Investment Trust | $307.46 million | 3.24 | $127.87 million | $0.98 | 11.67 |
| AG Mortgage Investment Trust | $480.33 million | 0.50 | $48.67 million | $0.88 | 8.62 |
PennyMac Mortgage Investment Trust has higher earnings, but lower revenue than AG Mortgage Investment Trust. AG Mortgage Investment Trust is trading at a lower price-to-earnings ratio than PennyMac Mortgage Investment Trust, indicating that it is currently the more affordable of the two stocks.
Dividends
PennyMac Mortgage Investment Trust pays an annual dividend of $1.60 per share and has a dividend yield of 14.0%. AG Mortgage Investment Trust pays an annual dividend of $0.92 per share and has a dividend yield of 12.1%. PennyMac Mortgage Investment Trust pays out 163.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AG Mortgage Investment Trust pays out 104.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AG Mortgage Investment Trust has raised its dividend for 2 consecutive years.
Profitability
This table compares PennyMac Mortgage Investment Trust and AG Mortgage Investment Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| PennyMac Mortgage Investment Trust | 41.59% | 9.53% | 0.71% |
| AG Mortgage Investment Trust | 10.13% | 14.42% | 0.59% |
Institutional & Insider Ownership
67.4% of PennyMac Mortgage Investment Trust shares are held by institutional investors. Comparatively, 27.3% of AG Mortgage Investment Trust shares are held by institutional investors. 0.9% of PennyMac Mortgage Investment Trust shares are held by company insiders. Comparatively, 3.3% of AG Mortgage Investment Trust shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Analyst Recommendations
This is a summary of recent recommendations for PennyMac Mortgage Investment Trust and AG Mortgage Investment Trust, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| PennyMac Mortgage Investment Trust | 0 | 5 | 3 | 0 | 2.38 |
| AG Mortgage Investment Trust | 0 | 3 | 5 | 0 | 2.63 |
PennyMac Mortgage Investment Trust currently has a consensus price target of $13.75, indicating a potential upside of 20.24%. AG Mortgage Investment Trust has a consensus price target of $9.25, indicating a potential upside of 21.98%. Given AG Mortgage Investment Trust’s stronger consensus rating and higher probable upside, analysts clearly believe AG Mortgage Investment Trust is more favorable than PennyMac Mortgage Investment Trust.
Risk and Volatility
PennyMac Mortgage Investment Trust has a beta of 1.25, meaning that its stock price is 25% more volatile than the S&P 500. Comparatively, AG Mortgage Investment Trust has a beta of 1.67, meaning that its stock price is 67% more volatile than the S&P 500.
Summary
AG Mortgage Investment Trust beats PennyMac Mortgage Investment Trust on 9 of the 17 factors compared between the two stocks.
About PennyMac Mortgage Investment Trust
PennyMac Mortgage Investment Trust, through its subsidiary, primarily invests in mortgage-related assets in the United States. The company operates through: Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production segments. Its Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, subordinate mortgage-backed securities (MBS), distressed loans, and real estate. The company's Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency MBS, as well as related interest rate hedging activities. Its Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. The company primarily sells its loans to government-sponsored entities or PennyMac Loan Services, LLC. 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 shareholders. The company was incorporated in 2009 and is headquartered in Westlake Village, California.
About AG Mortgage Investment Trust
AG Mortgage Investment Trust, Inc. operates as a residential mortgage real estate investment trust in the United States. Its investment portfolio includes residential investments, including non-agency loans, agency-eligible loans, re-and non-performing loans, and non-agency residential mortgage-backed securities, as well as commercial loans and commercial mortgage-backed securities. 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. AG Mortgage Investment Trust, Inc. was incorporated in 2011 and is based in New York, New York.