Financial Analysis: PennyMac Mortgage Investment Trust (NYSE:PMT) versus InterRent Real Estate Investment Trust (OTCMKTS:IIPZF)

InterRent Real Estate Investment Trust (OTCMKTS:IIPZF – Get Rating) and PennyMac Mortgage Investment Trust (NYSE:PMT – Get Rating) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Dividends

InterRent Real Estate Investment Trust pays an annual dividend of $0.27 per share and has a dividend yield of 2.5%. PennyMac Mortgage Investment Trust pays an annual dividend of $1.88 per share and has a dividend yield of 11.9%. InterRent Real Estate Investment Trust pays out 13.4% of its earnings in the form of a dividend. PennyMac Mortgage Investment Trust pays out -257.5% 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. PennyMac Mortgage Investment Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

70.8% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. 0.8% of PennyMac Mortgage Investment Trust 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.

Valuation & Earnings

This table compares InterRent Real Estate Investment Trust and PennyMac Mortgage Investment Trust’s revenue, earnings per share (EPS) and valuation.

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

Analyst Ratings

This is a breakdown of current recommendations for InterRent Real Estate Investment Trust and PennyMac Mortgage Investment Trust, as provided by MarketBeat.

InterRent Real Estate Investment Trust presently has a consensus price target of $18.64, suggesting a potential upside of 70.06%. PennyMac Mortgage Investment Trust has a consensus price target of $18.72, suggesting a potential upside of 18.62%. Given InterRent Real Estate Investment Trust’s stronger consensus rating and higher possible upside, research analysts plainly believe InterRent Real Estate Investment Trust is more favorable than PennyMac Mortgage Investment Trust.

Risk and Volatility

InterRent Real Estate Investment Trust has a beta of 0.43, meaning that its share price is 57% less volatile than the S&P 500. Comparatively, PennyMac Mortgage Investment Trust has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.

Profitability

This table compares InterRent Real Estate Investment Trust and PennyMac Mortgage Investment Trust’s net margins, return on equity and return on assets.

Summary

InterRent Real Estate Investment Trust beats PennyMac Mortgage Investment Trust on 9 of the 15 factors compared between the two stocks.

InterRent Real Estate Investment Trust Company Profile (Get Rating)

InterRent REIT is a growth-oriented real estate investment trust engaged in increasing Unitholder value and creating a growing and sustainable distribution through the acquisition and ownership of multi-residential properties. InterRent’s strategy is to expand its portfolio primarily within markets that have exhibited stable market vacancies, sufficient suites available to attain the critical mass necessary to implement an efficient portfolio management structure and, offer opportunities for accretive acquisitions. InterRent’s primary objectives are to use the proven industry experience of the Trustees, Management and Operational Team to: (i) to grow both funds from operations per Unit and net asset value per Unit through investments in a diversified portfolio of multi-residential properties; (ii) to provide Unitholders with sustainable and growing cash distributions, payable monthly; and (iii) to maintain a conservative payout ratio and balance sheet.

PennyMac Mortgage Investment Trust Company Profile (Get Rating)

PennyMac Mortgage Investment Trust, a specialty finance company, primarily invests in mortgage-related assets in the United States. The company’s Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, distressed loans, real estate, and non-agency subordinated bonds. Its Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency mortgage-backed securities (MBS), as well as related interest rate hedging activities. The company’s Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. 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 shareholders. PennyMac Mortgage Investment Trust was founded in 2009 and is headquartered in Westlake Village, California.

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