ARMOUR Residential REIT (NYSE:ARR) and Adamas Trust (NASDAQ:ADAM) Critical Contrast

Adamas Trust (NASDAQ:ADAM) and ARMOUR Residential REIT (NYSE:ARR) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Dividends

Adamas Trust pays an annual dividend of $1.08 per share and has a dividend yield of 11.0%. ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 17.7%. Adamas Trust pays out 64.3% of its earnings in the form of a dividend. ARMOUR Residential REIT pays out 77.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

54.9% of Adamas Trust shares are owned by institutional investors. Comparatively, 54.2% of ARMOUR Residential REIT shares are owned by institutional investors. 2.0% of Adamas Trust shares are owned by insiders. Comparatively, 0.2% of ARMOUR Residential REIT shares are owned by 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.

Earnings & Valuation

This table compares Adamas Trust and ARMOUR Residential REIT”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Adamas Trust	$601.95 million	1.46	$149.05 million	$1.68	5.82
ARMOUR Residential REIT	$442.30 million	5.21	$322.69 million	$3.72	4.38

ARMOUR Residential REIT has lower revenue, but higher earnings than Adamas Trust. ARMOUR Residential REIT is trading at a lower price-to-earnings ratio than Adamas Trust, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Adamas Trust has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500.

Profitability

This table compares Adamas Trust and ARMOUR Residential REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Adamas Trust	29.82%	14.72%	1.04%
ARMOUR Residential REIT	44.90%	15.10%	1.66%

Analyst Recommendations

This is a summary of recent ratings and target prices for Adamas Trust and ARMOUR Residential REIT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Adamas Trust	0	4	1	1	2.50
ARMOUR Residential REIT	1	2	2	0	2.20

Adamas Trust presently has a consensus target price of $9.50, suggesting a potential downside of 2.91%. ARMOUR Residential REIT has a consensus target price of $18.50, suggesting a potential upside of 13.59%. Given ARMOUR Residential REIT’s higher probable upside, analysts plainly believe ARMOUR Residential REIT is more favorable than Adamas Trust.

Summary

ARMOUR Residential REIT beats Adamas Trust on 10 of the 17 factors compared between the two stocks.

About Adamas Trust

New York Mortgage Trust, Inc. acquires, invests in, finances, and manages mortgage-related single-family and multi-family residential assets in the United States. Its targeted investments include residential loans, second mortgages, and business purpose loans; structured multi-family property investments, such as preferred equity in, and mezzanine loans to owners of multi-family properties, as well as joint venture equity investments in multi-family properties; non-agency residential mortgage-backed securities (RMBS); agency RMBS; commercial mortgage-backed securities (CMBS); and other mortgage, residential housing, and credit-related assets. 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 incorporated in 2003 and is headquartered in New York, New York.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. Its securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans; and unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.