Financial Analysis: PennyMac Mortgage Investment Trust (NYSE:PMT) vs. LTC Properties (NYSE:LTC)

PennyMac Mortgage Investment Trust (NYSE:PMT) and LTC Properties (NYSE:LTC) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, earnings, risk, dividends, analyst recommendations and profitability.

Valuation and Earnings

This table compares PennyMac Mortgage Investment Trust and LTC Properties’ 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 $351.07 million 4.38 $152.80 million $1.99 11.30
LTC Properties $168.65 million 11.14 $154.98 million $3.06 15.45

LTC Properties has lower revenue, but higher earnings than PennyMac Mortgage Investment Trust. PennyMac Mortgage Investment Trust is trading at a lower price-to-earnings ratio than LTC Properties, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

71.5% of PennyMac Mortgage Investment Trust shares are held by institutional investors. Comparatively, 76.0% of LTC Properties shares are held by institutional investors. 2.5% of PennyMac Mortgage Investment Trust shares are held by company insiders. Comparatively, 1.8% of LTC Properties shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

PennyMac Mortgage Investment Trust has a beta of 0.6, meaning that its stock price is 40% less volatile than the S&P 500. Comparatively, LTC Properties has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500.

Profitability

This table compares PennyMac Mortgage Investment Trust and LTC Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PennyMac Mortgage Investment Trust 46.63% 13.71% 2.43%
LTC Properties 95.25% 19.07% 10.25%

Analyst Ratings

This is a summary of recent recommendations for PennyMac Mortgage Investment Trust and LTC Properties, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PennyMac Mortgage Investment Trust 0 2 5 0 2.71
LTC Properties 3 1 1 0 1.60

PennyMac Mortgage Investment Trust currently has a consensus target price of $21.86, suggesting a potential downside of 2.77%. LTC Properties has a consensus target price of $37.60, suggesting a potential downside of 20.49%. Given PennyMac Mortgage Investment Trust’s stronger consensus rating and higher probable upside, equities research analysts clearly believe PennyMac Mortgage Investment Trust is more favorable than LTC Properties.

Dividends

PennyMac Mortgage Investment Trust pays an annual dividend of $1.88 per share and has a dividend yield of 8.4%. LTC Properties pays an annual dividend of $2.28 per share and has a dividend yield of 4.8%. PennyMac Mortgage Investment Trust pays out 94.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. LTC Properties pays out 74.5% of its earnings in the form of a dividend.

Summary

LTC Properties beats PennyMac Mortgage Investment Trust on 9 of the 16 factors compared between the two stocks.

About PennyMac Mortgage Investment Trust

PennyMac Mortgage Investment Trust, a specialty finance company, invests primarily in residential mortgage loans and mortgage-related assets in the United States. The company's Correspondent Production segment engages in purchasing, pooling, and reselling newly originated prime credit mortgage loans directly or in the form of mortgage-backed securities (MBS). Its Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, firm commitment to purchase CRT securities, distressed mortgage loans, real estate acquired in settlement of mortgage loans, non-Agency subordinated bonds, and small balance commercial real estate mortgage loans. 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; and interest rate hedging activities related to indebtedness. PNMAC Capital Management, LLC acts as the manager of PennyMac Mortgage Investment Trust. 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 founded in 2009 and is based in Westlake Village, California.

About LTC Properties

LTC is a real estate investment trust (REIT) investing in seniors housing and health care properties primarily through sale-leasebacks, mortgage financing, joint-ventures and structured finance solutions including preferred equity and mezzanine lending. LTC holds more than 200 investments in 28 states with 30 operating partners. The portfolio is comprised of approximately 50% seniors housing and 50% skilled nursing properties.

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