Comparing Chimera Investment Corporation (CIM) & Hatteras Financial Corp. (HTS)

Chimera Investment Corporation (NYSE: CIM) and Hatteras Financial Corp. (NYSE:HTS) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, risk, profitability and institutional ownership.

Analyst Ratings

This is a breakdown of current ratings and price targets for Chimera Investment Corporation and Hatteras Financial Corp., as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chimera Investment Corporation	0	4	0	0	2.00
Hatteras Financial Corp.	0	0	0	0	N/A

Chimera Investment Corporation presently has a consensus price target of $17.50, suggesting a potential downside of 8.47%. Given Chimera Investment Corporation’s higher possible upside, equities research analysts plainly believe Chimera Investment Corporation is more favorable than Hatteras Financial Corp..

Volatility and Risk

Chimera Investment Corporation has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500. Comparatively, Hatteras Financial Corp. has a beta of 0.3, indicating that its stock price is 70% less volatile than the S&P 500.

Dividends

Chimera Investment Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 10.5%. Hatteras Financial Corp. pays an annual dividend of $1.80 per share and has a dividend yield of 11.0%. Chimera Investment Corporation pays out 57.3% of its earnings in the form of a dividend. Hatteras Financial Corp. pays out 580.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hatteras Financial Corp. has raised its dividend for 2 consecutive years. Hatteras Financial Corp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Chimera Investment Corporation and Hatteras Financial Corp.’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Chimera Investment Corporation	$933.35 million	3.85	$655.36 million	$3.49	5.48
Hatteras Financial Corp.	N/A	N/A	N/A	$0.31	52.55

Chimera Investment Corporation has higher revenue and earnings than Hatteras Financial Corp.. Chimera Investment Corporation is trading at a lower price-to-earnings ratio than Hatteras Financial Corp., indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

53.3% of Chimera Investment Corporation shares are owned by institutional investors. 0.7% of Chimera Investment Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Chimera Investment Corporation and Hatteras Financial Corp.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chimera Investment Corporation	63.94%	14.27%	2.52%
Hatteras Financial Corp.	N/A	-16.93%	-1.89%

Summary

Chimera Investment Corporation beats Hatteras Financial Corp. on 10 of the 12 factors compared between the two stocks.

Chimera Investment Corporation Company Profile

Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.

Hatteras Financial Corp. Company Profile

Hatteras Financial Corp. is an externally managed mortgage real estate investment trust (REIT) that invests in single-family residential mortgage real estate assets, such as mortgage-backed security (MBS), mortgage servicing right (MSR), residential mortgage loans and other financial assets. MBS are pass-through securities consisting of a pool of mortgage loans. Its primary business is owning and managing agency securities, with a primary focus on adjustable-rate mortgage securities. Its primary investment assets include Agency MBS; other agency issued securities, such as credit-risk transfer bonds; MSR; non-agency securities; residential mortgage loans, and other real estate related assets as permitted by its investment guidelines and REIT requirements. Its business operations consist of the Hatteras Financial Corp., Onslow Bay Financial LLC, First Winston Securities, Inc. and Wind River TRS LLC. It is externally managed and advised by its manager, Atlantic Capital Advisors LLC.