Critical Comparison: Manhattan Bridge Capital (NASDAQ:LOAN) & ARMOUR Residential REIT (NYSE:ARR)

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

Profitability

This table compares ARMOUR Residential REIT and Manhattan Bridge Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARMOUR Residential REIT	44.90%	15.10%	1.66%
Manhattan Bridge Capital	58.30%	11.02%	7.59%

Risk & Volatility

ARMOUR Residential REIT has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500. Comparatively, Manhattan Bridge Capital has a beta of 0.16, suggesting that its stock price is 84% less volatile than the S&P 500.

Valuation & Earnings

This table compares ARMOUR Residential REIT and Manhattan Bridge Capital”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARMOUR Residential REIT	$800.42 million	2.95	$322.69 million	$3.72	4.48
Manhattan Bridge Capital	$8.67 million	5.53	$5.11 million	$0.42	9.99

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

Dividends

ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 17.3%. Manhattan Bridge Capital pays an annual dividend of $0.44 per share and has a dividend yield of 10.5%. 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. Manhattan Bridge Capital pays out 104.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Manhattan Bridge Capital has raised its dividend for 1 consecutive years. ARMOUR Residential REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and target prices for ARMOUR Residential REIT and Manhattan Bridge Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARMOUR Residential REIT	0	3	2	0	2.40
Manhattan Bridge Capital	0	1	0	0	2.00

ARMOUR Residential REIT presently has a consensus target price of $18.50, suggesting a potential upside of 10.94%. Given ARMOUR Residential REIT’s stronger consensus rating and higher probable upside, equities research analysts clearly believe ARMOUR Residential REIT is more favorable than Manhattan Bridge Capital.

Institutional and Insider Ownership

54.2% of ARMOUR Residential REIT shares are owned by institutional investors. Comparatively, 21.8% of Manhattan Bridge Capital shares are owned by institutional investors. 0.2% of ARMOUR Residential REIT shares are owned by insiders. Comparatively, 24.6% of Manhattan Bridge Capital shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

ARMOUR Residential REIT beats Manhattan Bridge Capital on 11 of the 17 factors compared between the two stocks.

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.

About Manhattan Bridge Capital

Manhattan Bridge Capital, Inc., a real estate finance company, originates, services, and manages a portfolio of first mortgage loans in the United States. The company offers short-term, secured, and non-banking loans to real estate investors to fund acquisition, renovation, rehabilitation, or development of residential or commercial properties. Its loans are secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers. 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. The company was founded in 1989 and is headquartered in Great Neck, New York.