Critical Survey: MFA Financial (NYSE:MFA) versus Clipper Realty (NYSE:CLPR)

MFA Financial (NYSE:MFA) and Clipper Realty (NYSE:CLPR) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Dividends

MFA Financial pays an annual dividend of $1.40 per share and has a dividend yield of 10.8%. Clipper Realty pays an annual dividend of $0.38 per share and has a dividend yield of 7.1%. MFA Financial pays out -1,749.8% of its earnings in the form of a dividend. Clipper Realty pays out -108.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. MFA Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

65.3% of MFA Financial shares are held by institutional investors. Comparatively, 37.6% of Clipper Realty shares are held by institutional investors. 0.7% of MFA Financial shares are held by company insiders. Comparatively, 52.3% of Clipper Realty shares are held by company 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.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for MFA Financial and Clipper Realty, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MFA Financial	0	1	4	0	2.80
Clipper Realty	1	1	0	0	1.50

MFA Financial currently has a consensus price target of $13.00, indicating a potential downside of 0.15%. Given MFA Financial’s stronger consensus rating and higher possible upside, equities analysts clearly believe MFA Financial is more favorable than Clipper Realty.

Profitability

This table compares MFA Financial and Clipper Realty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MFA Financial	14.22%	10.02%	1.76%
Clipper Realty	-2.54%	-85.95%	-0.29%

Earnings & Valuation

This table compares MFA Financial and Clipper Realty”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MFA Financial	$605.60 million	2.19	$80.16 million	($0.08)	-162.73
Clipper Realty	$143.10 million	0.60	-$5.90 million	($0.35)	-15.34

MFA Financial has higher revenue and earnings than Clipper Realty. MFA Financial is trading at a lower price-to-earnings ratio than Clipper Realty, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

MFA Financial has a beta of 2.16, suggesting that its share price is 116% more volatile than the S&P 500. Comparatively, Clipper Realty has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500.

Summary

MFA Financial beats Clipper Realty on 14 of the 16 factors compared between the two stocks.

About MFA Financial

MFA Financial, Inc., together with its subsidiaries, operates as a real estate investment trust in the United States. It invests in residential mortgage securities, including non-agency mortgage-backed securities, agency MBS, and credit risk transfer securities; residential whole loans, including purchased performing loans, purchased credit deteriorated, and non-performing loans; and mortgage servicing rights related assets. The company was incorporated in 1997 and is based in New York, New York.

About Clipper Realty

Clipper Realty Inc. (NYSE: CLPR) is a self-administered and self-managed real estate company that acquires, owns, manages, operates, and repositions multifamily residential and commercial properties in the New York metropolitan area, with a portfolio in Manhattan and Brooklyn.