Retail Opportunity Investments (ROIC) & PennyMac Mortgage Investment Trust (PMT) Head-To-Head Review

Retail Opportunity Investments (NASDAQ:ROIC) and PennyMac Mortgage Investment Trust (NYSE:PMT) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Insider and Institutional Ownership

94.3% of Retail Opportunity Investments shares are held by institutional investors. Comparatively, 66.1% of PennyMac Mortgage Investment Trust shares are held by institutional investors. 2.5% of Retail Opportunity Investments shares are held by insiders. Comparatively, 2.5% of PennyMac Mortgage Investment Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for Retail Opportunity Investments and PennyMac Mortgage Investment Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Retail Opportunity Investments 1 3 0 0 1.75
PennyMac Mortgage Investment Trust 0 2 4 0 2.67

Retail Opportunity Investments currently has a consensus price target of $18.00, suggesting a potential upside of 2.74%. PennyMac Mortgage Investment Trust has a consensus price target of $21.67, suggesting a potential upside of 3.77%. Given PennyMac Mortgage Investment Trust’s stronger consensus rating and higher possible upside, analysts plainly believe PennyMac Mortgage Investment Trust is more favorable than Retail Opportunity Investments.

Risk and Volatility

Retail Opportunity Investments has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, PennyMac Mortgage Investment Trust has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500.

Earnings and Valuation

This table compares Retail Opportunity Investments and PennyMac Mortgage Investment Trust’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Retail Opportunity Investments $295.80 million 6.77 $42.73 million $1.14 15.37
PennyMac Mortgage Investment Trust $351.07 million 4.07 $152.80 million $1.99 10.49

PennyMac Mortgage Investment Trust has higher revenue and earnings than Retail Opportunity Investments. PennyMac Mortgage Investment Trust is trading at a lower price-to-earnings ratio than Retail Opportunity Investments, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Retail Opportunity Investments and PennyMac Mortgage Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Retail Opportunity Investments 15.22% 3.46% 1.50%
PennyMac Mortgage Investment Trust 46.63% 13.71% 2.43%

Dividends

Retail Opportunity Investments pays an annual dividend of $0.79 per share and has a dividend yield of 4.5%. PennyMac Mortgage Investment Trust pays an annual dividend of $1.88 per share and has a dividend yield of 9.0%. Retail Opportunity Investments pays out 69.3% of its earnings in the form of a dividend. PennyMac Mortgage Investment Trust pays out 94.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Retail Opportunity Investments has increased its dividend for 9 consecutive years.

Summary

PennyMac Mortgage Investment Trust beats Retail Opportunity Investments on 10 of the 17 factors compared between the two stocks.

About Retail Opportunity Investments

Retail Opportunity Investments Corp. (NASDAQ: ROIC), is a fully-integrated, self-managed real estate investment trust (REIT) that specializes in the acquisition, ownership and management of grocery-anchored shopping centers located in densely-populated, metropolitan markets across the West Coast. As of March 31, 2019, ROIC owned 90 shopping centers encompassing approximately 10.3 million square feet. ROIC is the largest publicly-traded, grocery-anchored shopping center REIT focused exclusively on the West Coast. ROIC is a member of the S&P SmallCap 600 Index and has investment-grade corporate debt ratings from Moody's Investor Services and Standard & Poor's.

About PennyMac Mortgage Investment Trust

PennyMac Mortgage Investment Trust, a specialty finance company, invests primarily in residential mortgage loans and mortgage-related assets in the United States. The company's Correspondent Production segment engages in purchasing, pooling, and reselling newly originated prime credit mortgage loans directly or in the form of mortgage-backed securities (MBS). Its Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, firm commitment to purchase CRT securities, distressed mortgage loans, real estate acquired in settlement of mortgage loans, non-Agency subordinated bonds, and small balance commercial real estate mortgage loans. The company's Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency MBS; and interest rate hedging activities related to indebtedness. PNMAC Capital Management, LLC acts as the manager of PennyMac Mortgage Investment Trust. 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 founded in 2009 and is based in Westlake Village, California.

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