Contrasting KKR Real Estate Finance Trust (NYSE:KREF) and AG Mortgage Investment Trust (NYSE:MITT)

AG Mortgage Investment Trust (NYSE:MITT) and KKR Real Estate Finance Trust (NYSE:KREF) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, earnings, risk, analyst recommendations and institutional ownership.

Profitability

This table compares AG Mortgage Investment Trust and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AG Mortgage Investment Trust	10.13%	14.42%	0.59%
KKR Real Estate Finance Trust	-10.80%	-1.13%	-0.22%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for AG Mortgage Investment Trust and KKR Real Estate Finance Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AG Mortgage Investment Trust	0	3	5	0	2.63
KKR Real Estate Finance Trust	2	3	2	0	2.00

AG Mortgage Investment Trust currently has a consensus target price of $9.25, suggesting a potential upside of 24.45%. KKR Real Estate Finance Trust has a consensus target price of $9.50, suggesting a potential upside of 52.86%. Given KKR Real Estate Finance Trust’s higher probable upside, analysts clearly believe KKR Real Estate Finance Trust is more favorable than AG Mortgage Investment Trust.

Valuation and Earnings

This table compares AG Mortgage Investment Trust 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
AG Mortgage Investment Trust	$480.33 million	0.49	$48.67 million	$0.88	8.45
KKR Real Estate Finance Trust	$435.60 million	0.92	-$47.05 million	($1.05)	-5.92

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

Insider and Institutional Ownership

27.3% of AG Mortgage Investment Trust shares are owned by institutional investors. Comparatively, 70.2% of KKR Real Estate Finance Trust shares are owned by institutional investors. 3.3% of AG Mortgage Investment Trust shares are owned by insiders. Comparatively, 2.1% of KKR Real Estate Finance Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

AG Mortgage Investment Trust has a beta of 1.69, suggesting that its share price is 69% more volatile than the S&P 500. Comparatively, KKR Real Estate Finance Trust has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500.

Dividends

AG Mortgage Investment Trust pays an annual dividend of $0.96 per share and has a dividend yield of 12.9%. KKR Real Estate Finance Trust pays an annual dividend of $1.00 per share and has a dividend yield of 16.1%. AG Mortgage Investment Trust pays out 109.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. KKR Real Estate Finance Trust pays out -95.2% of its earnings in the form of a dividend. AG Mortgage Investment Trust has raised its dividend for 2 consecutive years. KKR Real Estate Finance Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

AG Mortgage Investment Trust beats KKR Real Estate Finance Trust on 12 of the 17 factors compared between the two stocks.

About AG Mortgage Investment Trust

AG Mortgage Investment Trust, Inc. operates as a residential mortgage real estate investment trust in the United States. Its investment portfolio includes residential investments, including non-agency loans, agency-eligible loans, re-and non-performing loans, and non-agency residential mortgage-backed securities, as well as commercial loans and commercial mortgage-backed securities. 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. AG Mortgage Investment Trust, Inc. was incorporated in 2011 and is based in New York, New York.

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.