Financial Contrast: TPG RE Finance Trust (TRTX) & Stonegate Mortgage (SGM)

Stonegate Mortgage (NYSE: SGM) and TPG RE Finance Trust (NYSE:TRTX) are both small-cap financials companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Institutional and Insider Ownership

44.3% of Stonegate Mortgage shares are held by institutional investors. Comparatively, 26.4% of TPG RE Finance Trust shares are held by institutional investors. 44.5% of Stonegate Mortgage shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Stonegate Mortgage and TPG RE Finance Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stonegate Mortgage 0 0 0 0 N/A
TPG RE Finance Trust 0 2 3 0 2.60

TPG RE Finance Trust has a consensus target price of $21.20, suggesting a potential upside of 12.35%. Given TPG RE Finance Trust’s higher probable upside, analysts clearly believe TPG RE Finance Trust is more favorable than Stonegate Mortgage.

Profitability

This table compares Stonegate Mortgage and TPG RE Finance Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stonegate Mortgage -13.22% -6.70% -1.57%
TPG RE Finance Trust N/A N/A N/A

Valuation & Earnings

This table compares Stonegate Mortgage and TPG RE Finance Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Stonegate Mortgage N/A N/A N/A $1.16 6.89
TPG RE Finance Trust $92.39 million 12.18 $69.96 million N/A N/A

TPG RE Finance Trust has higher revenue and earnings than Stonegate Mortgage.

Dividends

TPG RE Finance Trust pays an annual dividend of $0.71 per share and has a dividend yield of 3.8%. Stonegate Mortgage does not pay a dividend.

Summary

TPG RE Finance Trust beats Stonegate Mortgage on 7 of the 9 factors compared between the two stocks.

Stonegate Mortgage Company Profile

Stonegate Mortgage Corporation is a non-bank mortgage company. The Company is focused on originating, financing and servicing the United States residential mortgage loans. The Company’s segments include Originations, Servicing, Financing and Other. The Originations segment primarily originates and sells residential mortgage loans, which conform to the underwriting guidelines of the government sponsored enterprises and government agencies, and non-agency whole loan investors. The Servicing segment includes loan administration, collection and default activities, including the collection and remittance of loan payments, responding to customer inquiries, collection of principal and interest payments, holding custodial funds for the payment of property taxes and insurance premiums, counseling delinquent mortgagors and modifying loans. The Financing segment includes warehouse-lending activities to correspondent customers by the Company’s subsidiary, NattyMac, LLC.

TPG RE Finance Trust Company Profile

TPG RE Finance Trust, Inc. is a commercial real estate finance company. The Company is engaged in originating, acquiring and managing commercial mortgage loans and other commercial real estate-related debt instruments. It focuses primarily on directly originating and selectively acquiring floating rate first mortgage loans that are secured by high quality commercial real estate properties undergoing some form of transition and value creation, such as re-tenanting, refurbishment or other form of repositioning. As of December 31, 2016, the Company’s portfolio consisted of 54 first mortgage loans. As of December 31, 2016, 97% of the loan commitments in its portfolio consisted of floating rate loans, and 98.6% of the loan commitments in its portfolio consisted of first mortgage loans.

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