Financial Survey: SOTHERLY HOTELS/SH SH (NASDAQ:SOHO) & Western Asset Mortgage Capital (NASDAQ:WMC)

Western Asset Mortgage Capital (NYSE:WMC) and SOTHERLY HOTELS/SH SH (NASDAQ:SOHO) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, valuation, earnings, profitability, dividends, analyst recommendations and institutional ownership.

Profitability

This table compares Western Asset Mortgage Capital and SOTHERLY HOTELS/SH SH’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Western Asset Mortgage Capital 18.47% 11.66% 1.26%
SOTHERLY HOTELS/SH SH 0.46% 0.90% 0.17%

Risk and Volatility

Western Asset Mortgage Capital has a beta of 0.75, meaning that its stock price is 25% less volatile than the S&P 500. Comparatively, SOTHERLY HOTELS/SH SH has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Western Asset Mortgage Capital and SOTHERLY HOTELS/SH SH, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Western Asset Mortgage Capital 0 1 1 0 2.50
SOTHERLY HOTELS/SH SH 0 0 0 0 N/A

Western Asset Mortgage Capital currently has a consensus price target of $10.50, indicating a potential upside of 0.96%. Given Western Asset Mortgage Capital’s higher possible upside, research analysts plainly believe Western Asset Mortgage Capital is more favorable than SOTHERLY HOTELS/SH SH.

Valuation and Earnings

This table compares Western Asset Mortgage Capital and SOTHERLY HOTELS/SH SH’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Western Asset Mortgage Capital $209.36 million 2.64 $26.41 million $1.36 7.65
SOTHERLY HOTELS/SH SH $178.17 million 0.53 $110,000.00 $1.04 6.38

Western Asset Mortgage Capital has higher revenue and earnings than SOTHERLY HOTELS/SH SH. SOTHERLY HOTELS/SH SH is trading at a lower price-to-earnings ratio than Western Asset Mortgage Capital, indicating that it is currently the more affordable of the two stocks.

Dividends

Western Asset Mortgage Capital pays an annual dividend of $1.24 per share and has a dividend yield of 11.9%. SOTHERLY HOTELS/SH SH pays an annual dividend of $0.52 per share and has a dividend yield of 7.8%. Western Asset Mortgage Capital pays out 91.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SOTHERLY HOTELS/SH SH pays out 50.0% of its earnings in the form of a dividend.

Insider and Institutional Ownership

46.4% of Western Asset Mortgage Capital shares are held by institutional investors. Comparatively, 30.2% of SOTHERLY HOTELS/SH SH shares are held by institutional investors. 0.5% of Western Asset Mortgage Capital shares are held by company insiders. Comparatively, 14.4% of SOTHERLY HOTELS/SH SH shares are held by company 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.

Summary

Western Asset Mortgage Capital beats SOTHERLY HOTELS/SH SH on 13 of the 15 factors compared between the two stocks.

Western Asset Mortgage Capital Company Profile

Western Asset Mortgage Capital Corporation operates as a real estate investment trust in the United States. It focuses on investing in, financing, and managing a portfolio of agency and non-agency residential mortgage-backed securities and commercial mortgage-backed securities, residential whole-loans, residential bridge loans, securitized commercial loans, and other financial assets. 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 Pasadena, California.

SOTHERLY HOTELS/SH SH Company Profile

Sotherly Hotels Inc. is a self-managed and self-administered lodging REIT focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the Southern United States. Currently, the Company's portfolio consists of investments in twelve hotel properties, comprising 3,156 rooms, and an interest in the Hyde Resort & Residences, a luxury condo hotel. The Company owns hotels that operate under the Hilton Worldwide, InterContinental Hotels Group and Marriott International, Inc. brands, as well as independent hotels. Sotherly Hotels Inc. was organized in 2004 and is headquartered in Williamsburg, Virginia.

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