Financial Review: MFA Financial (NYSE:MFA) vs. BrightSpire Capital (NYSE:BRSP)

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

Institutional and Insider Ownership

56.6% of BrightSpire Capital shares are held by institutional investors. Comparatively, 65.3% of MFA Financial shares are held by institutional investors. 2.1% of BrightSpire Capital shares are held by company insiders. Comparatively, 0.7% of MFA Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
BrightSpire Capital	-79.23%	8.82%	2.55%
MFA Financial	16.47%	9.61%	1.64%

Analyst Ratings

This is a breakdown of current recommendations for BrightSpire Capital and MFA Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BrightSpire Capital	0	3	3	0	2.50
MFA Financial	0	0	5	0	3.00

BrightSpire Capital presently has a consensus target price of $7.69, indicating a potential upside of 32.66%. MFA Financial has a consensus target price of $13.70, indicating a potential upside of 27.51%. Given BrightSpire Capital’s higher probable upside, analysts plainly believe BrightSpire Capital is more favorable than MFA Financial.

Earnings and Valuation

This table compares BrightSpire Capital and MFA Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BrightSpire Capital	$347.22 million	2.16	-$15.55 million	($1.05)	-5.52
MFA Financial	$252.85 million	4.36	$80.16 million	$0.81	13.26

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

Dividends

BrightSpire Capital pays an annual dividend of $0.64 per share and has a dividend yield of 11.0%. MFA Financial pays an annual dividend of $1.44 per share and has a dividend yield of 13.4%. BrightSpire Capital pays out -61.0% of its earnings in the form of a dividend. MFA Financial pays out 177.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

BrightSpire Capital has a beta of 1.98, meaning that its stock price is 98% more volatile than the S&P 500. Comparatively, MFA Financial has a beta of 2.18, meaning that its stock price is 118% more volatile than the S&P 500.

Summary

MFA Financial beats BrightSpire Capital on 11 of the 16 factors compared between the two stocks.

About BrightSpire Capital

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States and Europe. The company operates through Senior and Mezzanine Loans and Preferred Equity; Net Leased and Other Real Estate; and Corporate and Other segments. It focuses on originating, acquiring, financing, and managing a diversified portfolio of CRE debt investments consisting of first mortgage loans, senior loans, debt securities, mezzanine loans, and preferred equity investments, as well as net leased properties. 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. The company was formerly known as Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.

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.