Invesco Mortgage Capital (NYSE:IVR – Get Free Report) and KKR Real Estate Finance Trust (NYSE:KREF – Get Free Report) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, profitability and valuation.
Valuation and Earnings
This table compares Invesco Mortgage Capital and KKR Real Estate Finance Trust’s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Invesco Mortgage Capital | $4.19 million | 104.51 | -$15.86 million | ($0.80) | -11.30 |
| KKR Real Estate Finance Trust | $640.41 million | 1.07 | -$30.85 million | ($0.78) | -12.64 |
Invesco Mortgage Capital has higher earnings, but lower revenue than KKR Real Estate Finance Trust. KKR Real Estate Finance Trust is trading at a lower price-to-earnings ratio than Invesco Mortgage Capital, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Invesco Mortgage Capital has a beta of 1.88, indicating that its share price is 88% more volatile than the S&P 500. Comparatively, KKR Real Estate Finance Trust has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.
Dividends
Invesco Mortgage Capital pays an annual dividend of $1.60 per share and has a dividend yield of 17.7%. KKR Real Estate Finance Trust pays an annual dividend of $1.72 per share and has a dividend yield of 17.4%. Invesco Mortgage Capital pays out -200.0% of its earnings in the form of a dividend. KKR Real Estate Finance Trust pays out -220.5% 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.
Analyst Ratings
This is a breakdown of current ratings and price targets for Invesco Mortgage Capital and KKR Real Estate Finance Trust, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Invesco Mortgage Capital | 2 | 2 | 0 | 0 | 1.50 |
| KKR Real Estate Finance Trust | 0 | 2 | 4 | 0 | 2.67 |
Invesco Mortgage Capital presently has a consensus target price of $9.83, suggesting a potential upside of 8.78%. KKR Real Estate Finance Trust has a consensus target price of $12.57, suggesting a potential upside of 27.50%. Given KKR Real Estate Finance Trust’s stronger consensus rating and higher possible upside, analysts plainly believe KKR Real Estate Finance Trust is more favorable than Invesco Mortgage Capital.
Profitability
This table compares Invesco Mortgage Capital and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Invesco Mortgage Capital | -5.71% | 64.48% | 5.87% |
| KKR Real Estate Finance Trust | -4.82% | 10.59% | 2.01% |
Insider and Institutional Ownership
49.6% of Invesco Mortgage Capital shares are held by institutional investors. Comparatively, 73.0% of KKR Real Estate Finance Trust shares are held by institutional investors. 0.2% of Invesco Mortgage Capital shares are held by company insiders. Comparatively, 1.2% of KKR Real Estate Finance Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Summary
KKR Real Estate Finance Trust beats Invesco Mortgage Capital on 9 of the 16 factors compared between the two stocks.
About Invesco Mortgage Capital
Invesco Mortgage Capital Inc. operates as a real estate investment trust (REIT) that primarily focuses on investing in, financing, and managing mortgage-backed securities and other mortgage-related assets. It invests in residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS) that are guaranteed by a U.S. government agency or federally chartered corporation; RMBS and CMBS that are not issued or guaranteed by a U.S. government agency or federally chartered corporation; credit risk transfer securities that are unsecured obligations issued by government-sponsored enterprises; residential and commercial mortgage loans; and other real estate-related financing arrangements. Invesco Mortgage Capital Inc. has elected to be taxed as a REIT and would be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2008 and is headquartered in Atlanta, Georgia.
About KKR Real Estate Finance Trust
KKR Real Estate Finance Trust Inc., a mortgage real estate investment trust, focuses primarily on originating and acquiring transitional senior loans secured by commercial real estate (CRE) assets. It engages in the origination and purchase of credit investments related to CRE, including leveraged and unleveraged commercial real estate loans. The company has elected to be taxed as a real estate investment trust and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. KKR Real Estate Finance Trust Inc. was incorporated in 2014 and is headquartered in New York, New York.
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