Reviewing Annaly Capital Management (NLY) and CYS Investments (CYS)

Annaly Capital Management (NYSE: NLY) and CYS Investments (NYSE:CYS) are both financials companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, risk, dividends, valuation and profitability.

Volatility and Risk

Annaly Capital Management has a beta of 0.05, indicating that its stock price is 95% less volatile than the S&P 500. Comparatively, CYS Investments has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for Annaly Capital Management and CYS Investments, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Annaly Capital Management 0 3 1 0 2.25
CYS Investments 0 3 0 0 2.00

Annaly Capital Management presently has a consensus price target of $11.63, indicating a potential upside of 11.99%. CYS Investments has a consensus price target of $8.50, indicating a potential upside of 28.59%. Given CYS Investments’ higher probable upside, analysts clearly believe CYS Investments is more favorable than Annaly Capital Management.

Institutional and Insider Ownership

57.1% of Annaly Capital Management shares are held by institutional investors. Comparatively, 62.2% of CYS Investments shares are held by institutional investors. 0.4% of Annaly Capital Management shares are held by company insiders. Comparatively, 1.0% of CYS Investments shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Annaly Capital Management pays an annual dividend of $1.20 per share and has a dividend yield of 11.6%. CYS Investments pays an annual dividend of $1.00 per share and has a dividend yield of 15.1%. Annaly Capital Management pays out 90.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CYS Investments pays out 95.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Annaly Capital Management and CYS Investments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Annaly Capital Management 72.18% 11.66% 1.53%
CYS Investments 64.82% 13.00% 1.36%

Valuation and Earnings

This table compares Annaly Capital Management and CYS Investments’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Annaly Capital Management $1.48 billion 8.11 $1.57 billion $1.33 7.80
CYS Investments $318.87 million 3.21 $181.26 million $1.05 6.30

Annaly Capital Management has higher revenue and earnings than CYS Investments. CYS Investments is trading at a lower price-to-earnings ratio than Annaly Capital Management, indicating that it is currently the more affordable of the two stocks.

Summary

Annaly Capital Management beats CYS Investments on 10 of the 16 factors compared between the two stocks.

Annaly Capital Management Company Profile

Annaly Capital Management, Inc. is a mortgage real estate investment trust (REIT). The Company owns a portfolio of real estate related investments. Its investment groups primarily consist of Agency, which invests primarily in various types of Agency mortgage-backed securities and related derivatives to hedge these investments; Residential credit, which invests primarily in non-Agency mortgage-backed assets within securitized products and residential mortgage loan markets; Commercial real estate, which originates and invests in commercial mortgage loans, securities, and other commercial real estate investments, and Middle market, which provides customized debt financing to middle-market businesses. Its business operations consist of Annaly Commercial Real Estate Group, Inc., which is its subsidiary that specializes in originating or acquiring, financing and managing commercial loans and other commercial real estate debt; Annaly Middle Market Lending LLC, and RCap Securities, Inc.

CYS Investments Company Profile

CYS Investments, Inc. is a specialty finance company. The Company’s objective is to provide consistent returns to its investors through a combination of dividends and capital appreciation. It invests in agency residential mortgage-backed security (RMBS) collateralized by fixed rate single-family residential mortgage loans; adjustable-rate mortgages (ARMs), which have coupon rates that reset monthly, or hybrid ARMs, which have a coupon rate that is fixed for an initial period. In addition, it has investments in collateralized mortgage obligations issued by a government agency or government-sponsored entity (GSE) that are collateralized by Agency RMBS. Its investments consist of residential mortgage pass-through securities for which the principal and interest payments are guaranteed by a GSE, such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, or by the United States Government agency, such as Government National Mortgage Association.

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