Head-To-Head Review: Arbor Realty Trust (NYSE:ABR) & ARMOUR Residential REIT (NYSE:ARR)

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

Earnings and Valuation

This table compares Arbor Realty 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
Arbor Realty Trust	$683.14 million	4.06	$371.43 million	$1.61	9.15
ARMOUR Residential REIT	$145.72 million	7.17	-$67.92 million	$2.36	7.94

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

Volatility & Risk

Arbor Realty Trust has a beta of 2.06, indicating that its share price is 106% more volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 1.5, indicating that its share price is 50% more volatile than the S&P 500.

Institutional and Insider Ownership

57.3% of Arbor Realty Trust shares are held by institutional investors. Comparatively, 54.2% of ARMOUR Residential REIT shares are held by institutional investors. 3.7% of Arbor Realty Trust shares are held by insiders. Comparatively, 0.4% of ARMOUR Residential REIT shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Arbor Realty Trust	24.59%	15.75%	2.68%
ARMOUR Residential REIT	-19.85%	16.64%	1.69%

Analyst Ratings

This is a breakdown of recent recommendations for Arbor Realty Trust and ARMOUR Residential REIT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arbor Realty Trust	2	2	2	0	2.00
ARMOUR Residential REIT	0	4	0	0	2.00

Arbor Realty Trust currently has a consensus target price of $14.25, indicating a potential downside of 3.26%. ARMOUR Residential REIT has a consensus target price of $19.83, indicating a potential upside of 5.83%. Given ARMOUR Residential REIT’s higher possible upside, analysts plainly believe ARMOUR Residential REIT is more favorable than Arbor Realty Trust.

Dividends

Arbor Realty Trust pays an annual dividend of $1.72 per share and has a dividend yield of 11.7%. ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 15.4%. Arbor Realty Trust pays out 106.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ARMOUR Residential REIT pays out 122.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arbor Realty Trust has increased its dividend for 12 consecutive years.

Summary

Arbor Realty Trust beats ARMOUR Residential REIT on 11 of the 16 factors compared between the two stocks.

About Arbor Realty Trust

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates through Structured Business and Agency Business segments. It primarily invests in bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. In addition, the company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. 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. Arbor Realty Trust, Inc. was incorporated in 2003 and is headquartered in Uniondale, 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.