Analyzing OUTFRONT Media (NYSE:OUT) and Two Harbors Investment (NYSE:TWO)

OUTFRONT Media (NYSE:OUT) and Two Harbors Investment (NYSE:TWO) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, profitability, dividends, valuation, analyst recommendations, risk and earnings.

Analyst Recommendations

This is a summary of recent recommendations and price targets for OUTFRONT Media and Two Harbors Investment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OUTFRONT Media	0	3	2	0	2.40
Two Harbors Investment	0	3	4	0	2.57

OUTFRONT Media presently has a consensus price target of $19.25, suggesting a potential upside of 2.28%. Two Harbors Investment has a consensus price target of $13.71, suggesting a potential upside of 15.78%. Given Two Harbors Investment’s stronger consensus rating and higher probable upside, analysts clearly believe Two Harbors Investment is more favorable than OUTFRONT Media.

Profitability

This table compares OUTFRONT Media and Two Harbors Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OUTFRONT Media	13.30%	40.33%	4.54%
Two Harbors Investment	-87.84%	4.45%	0.55%

Dividends

OUTFRONT Media pays an annual dividend of $1.20 per share and has a dividend yield of 6.4%. Two Harbors Investment pays an annual dividend of $1.80 per share and has a dividend yield of 15.2%. OUTFRONT Media pays out 87.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Two Harbors Investment pays out -37.3% of its earnings in the form of a dividend. Two Harbors Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

OUTFRONT Media has a beta of 1.96, suggesting that its share price is 96% more volatile than the S&P 500. Comparatively, Two Harbors Investment has a beta of 1.85, suggesting that its share price is 85% more volatile than the S&P 500.

Earnings and Valuation

This table compares OUTFRONT Media and Two Harbors Investment”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OUTFRONT Media	$1.82 billion	1.72	-$430.40 million	$1.37	13.74
Two Harbors Investment	$480.36 million	2.55	-$106.37 million	($4.82)	-2.46

Two Harbors Investment has lower revenue, but higher earnings than OUTFRONT Media. Two Harbors Investment is trading at a lower price-to-earnings ratio than OUTFRONT Media, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

64.2% of Two Harbors Investment shares are held by institutional investors. 1.2% of OUTFRONT Media shares are held by insiders. Comparatively, 0.6% of Two Harbors Investment shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

About OUTFRONT Media

OUTFRONT leverages the power of technology, location, and creativity to connect brands with consumers outside of their homes through one of the largest and most diverse sets of billboard, transit, and mobile assets in North America. Through its technology platform, OUTFRONT will fundamentally change the ways advertisers engage audiences on-the-go.

About Two Harbors Investment

Two Harbors Investment Corp. invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through RoundPoint in the United States. The company target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, hybrid mortgage loans, or derivatives; and other assets, such as financial and mortgage-related assets, including non-agency securities and non-hedging transactions. It qualifies as a REIT for federal income tax purposes. As a REIT, the company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in St. Louis Park, Minnesota.