Western Asset Mortgage Capital Corporation (NYSE: WMC) and Dynex Capital (NYSE:DX) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitabiliy, risk, valuation, dividends, analyst recommendations, earnings and institutional ownership.
Dividends
Western Asset Mortgage Capital Corporation pays an annual dividend of $1.24 per share and has a dividend yield of 11.9%. Dynex Capital pays an annual dividend of $0.72 per share and has a dividend yield of 10.1%. Western Asset Mortgage Capital Corporation pays out 167.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Dynex Capital pays out 46.8% of its earnings in the form of a dividend.
Analyst Recommendations
This is a breakdown of current recommendations and price targets for Western Asset Mortgage Capital Corporation and Dynex Capital, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Western Asset Mortgage Capital Corporation | 0 | 5 | 0 | 0 | 2.00 |
| Dynex Capital | 0 | 3 | 0 | 0 | 2.00 |
Western Asset Mortgage Capital Corporation presently has a consensus price target of $10.25, suggesting a potential downside of 1.63%. Dynex Capital has a consensus price target of $7.13, suggesting a potential upside of 0.21%. Given Dynex Capital’s higher possible upside, analysts plainly believe Dynex Capital is more favorable than Western Asset Mortgage Capital Corporation.
Profitability
This table compares Western Asset Mortgage Capital Corporation and Dynex Capital’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Western Asset Mortgage Capital Corporation | 30.09% | 6.96% | 0.98% |
| Dynex Capital | 93.54% | 11.01% | 1.22% |
Risk & Volatility
Western Asset Mortgage Capital Corporation has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500. Comparatively, Dynex Capital has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500.
Valuation & Earnings
This table compares Western Asset Mortgage Capital Corporation and Dynex Capital’s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Western Asset Mortgage Capital Corporation | $54.94 million | 7.95 | $31.02 million | $0.74 | 14.08 |
| Dynex Capital | $105.39 million | 3.32 | $75.82 million | $1.54 | 4.62 |
Dynex Capital has higher revenue and earnings than Western Asset Mortgage Capital Corporation. Dynex Capital is trading at a lower price-to-earnings ratio than Western Asset Mortgage Capital Corporation, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
37.2% of Western Asset Mortgage Capital Corporation shares are owned by institutional investors. Comparatively, 44.0% of Dynex Capital shares are owned by institutional investors. 0.4% of Western Asset Mortgage Capital Corporation shares are owned by company insiders. Comparatively, 7.1% of Dynex Capital 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.
Summary
Dynex Capital beats Western Asset Mortgage Capital Corporation on 11 of the 14 factors compared between the two stocks.
Western Asset Mortgage Capital Corporation Company Profile
Western Asset Mortgage Capital Corporation is a real estate investment trust. The Company is focused on investing in, financing and managing a diversified portfolio of real estate-related securities, whole-loans and other financial assets. The Company’s portfolio includes Agency residential mortgage-backed securities (RMBS), including Mortgage pass-through certificates, Agency derivatives, Agency Interest-Only Strips and Agency collateralized mortgage obligations (CMOs); Non-Agency RMBS, and Agency commercial mortgage-backed securities (CMBS), Non-Agency CMBS, Non United States CMBS and asset-backed securities (ABS), as well as Residential and Commercial Whole-Loans. The Company may utilize to-be-announced forward contracts (TBAs), in order to invest in Agency RMBS. The Company’s manager is Western Asset Management Company.
Dynex Capital Company Profile
Dynex Capital, Inc. is an internally managed mortgage real estate investment trust, which invests in residential and commercial mortgage securities on a leveraged basis. The Company’s objective is to provide attractive risk-adjusted returns to its shareholders over the long term that is reflective of a leveraged fixed income portfolio with a focus on capital preservation. It seeks to provide returns to its shareholders through regular quarterly dividends and through capital appreciation. It invests in Agency and non-Agency mortgage-backed securities (MBS). MBS consists of residential MBS (RMBS), commercial MBS (CMBS) and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the United States Government or a government-sponsored entity (GSE), such as Fannie Mae and Freddie Mac.
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