Critical Review: Vornado Realty Trust (NYSE:VNO) vs. Invesco Mortgage Capital (NYSE:IVR)

Vornado Realty Trust (NYSE:VNO) and Invesco Mortgage Capital (NYSE:IVR) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, institutional ownership, earnings, valuation and dividends.

Risk & Volatility

Vornado Realty Trust has a beta of 1.64, indicating that its share price is 64% more volatile than the S&P 500. Comparatively, Invesco Mortgage Capital has a beta of 1.9, indicating that its share price is 90% more volatile than the S&P 500.

Profitability

This table compares Vornado Realty Trust and Invesco Mortgage Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Vornado Realty Trust	4.51%	3.21%	0.92%
Invesco Mortgage Capital	-9.40%	59.85%	5.50%

Institutional & Insider Ownership

90.0% of Vornado Realty Trust shares are owned by institutional investors. Comparatively, 40.5% of Invesco Mortgage Capital shares are owned by institutional investors. 8.1% of Vornado Realty Trust shares are owned by insiders. Comparatively, 0.2% of Invesco Mortgage Capital shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Vornado Realty Trust and Invesco Mortgage Capital”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vornado Realty Trust	$1.78 billion	4.49	$105.49 million	$0.09	465.78
Invesco Mortgage Capital	-$6.02 million	-73.50	-$15.86 million	($1.05)	-7.69

Vornado Realty Trust has higher revenue and earnings than Invesco Mortgage Capital. Invesco Mortgage Capital is trading at a lower price-to-earnings ratio than Vornado Realty Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Vornado Realty Trust and Invesco Mortgage Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vornado Realty Trust	3	6	2	0	1.91
Invesco Mortgage Capital	0	2	1	0	2.33

Vornado Realty Trust presently has a consensus target price of $32.80, suggesting a potential downside of 21.77%. Invesco Mortgage Capital has a consensus target price of $9.00, suggesting a potential upside of 11.52%. Given Invesco Mortgage Capital’s stronger consensus rating and higher possible upside, analysts clearly believe Invesco Mortgage Capital is more favorable than Vornado Realty Trust.

Dividends

Vornado Realty Trust pays an annual dividend of $0.30 per share and has a dividend yield of 0.7%. Invesco Mortgage Capital pays an annual dividend of $1.60 per share and has a dividend yield of 19.8%. Vornado Realty Trust pays out 333.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Invesco Mortgage Capital pays out -152.4% of its earnings in the form of a dividend. Invesco Mortgage Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Vornado Realty Trust beats Invesco Mortgage Capital on 9 of the 16 factors compared between the two stocks.

About Vornado Realty Trust

Vornado Realty Trust is a fully – integrated equity real estate investment trust.

About Invesco Mortgage Capital

Invesco Mortgage Capital Inc. operates as a real estate investment trust (REIT) that invests, finances, and manages mortgage-backed securities and other mortgage-related assets in the United States. It invests in residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS) that are guaranteed by a U.S. government agency or federally chartered corporation; RMBS and CMBS that are not issued or guaranteed by the United States government agency or federally chartered corporation; the United States treasury securities; real estate-related financing arrangements; to-be-announced securities forward contracts to purchase RMBS; and commercial mortgage loans. It has elected to be taxed as a REIT and would 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 2008 and is headquartered in Atlanta, Georgia.