Reviewing CYS Investments (CYS) and Annaly Capital Management (NYSE:NLY)

CYS Investments (NYSE: CYS) and Annaly Capital Management (NYSE:NLY) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, risk, dividends and analyst recommendations.

Profitability

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This table compares CYS Investments and Annaly Capital Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CYS Investments 64.82% 13.00% 1.36%
Annaly Capital Management 72.18% 11.66% 1.53%

Institutional and Insider Ownership

62.8% of CYS Investments shares are held by institutional investors. Comparatively, 60.1% of Annaly Capital Management shares are held by institutional investors. 1.0% of CYS Investments shares are held by company insiders. Comparatively, 0.4% of Annaly Capital Management shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares CYS Investments and Annaly Capital Management’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CYS Investments $318.87 million 3.30 $181.26 million N/A N/A
Annaly Capital Management $1.48 billion 8.18 $1.57 billion $1.22 8.59

Annaly Capital Management has higher revenue and earnings than CYS Investments.

Analyst Recommendations

This is a summary of current recommendations for CYS Investments and Annaly Capital Management, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CYS Investments 0 3 0 0 2.00
Annaly Capital Management 0 3 0 0 2.00

CYS Investments presently has a consensus price target of $8.50, indicating a potential upside of 25.18%. Annaly Capital Management has a consensus price target of $11.25, indicating a potential upside of 7.35%. Given CYS Investments’ higher probable upside, equities research analysts clearly believe CYS Investments is more favorable than Annaly Capital Management.

Dividends

CYS Investments pays an annual dividend of $0.88 per share and has a dividend yield of 13.0%. Annaly Capital Management pays an annual dividend of $1.20 per share and has a dividend yield of 11.5%. Annaly Capital Management pays out 98.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

CYS Investments has a beta of 0.33, suggesting that its share price is 67% less volatile than the S&P 500. Comparatively, Annaly Capital Management has a beta of 0.02, suggesting that its share price is 98% less volatile than the S&P 500.

Summary

CYS Investments beats Annaly Capital Management on 7 of the 13 factors compared between the two stocks.

About CYS Investments

CYS Investments, Inc. is a specialty finance company. The Company’s objective is to provide consistent returns to its investors through a combination of dividends and capital appreciation. It invests in agency residential mortgage-backed security (RMBS) collateralized by fixed rate single-family residential mortgage loans; adjustable-rate mortgages (ARMs), which have coupon rates that reset monthly, or hybrid ARMs, which have a coupon rate that is fixed for an initial period. In addition, it has investments in collateralized mortgage obligations issued by a government agency or government-sponsored entity (GSE) that are collateralized by Agency RMBS. Its investments consist of residential mortgage pass-through securities for which the principal and interest payments are guaranteed by a GSE, such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, or by the United States Government agency, such as Government National Mortgage Association.

About Annaly Capital Management

Annaly Capital Management, Inc., a diversified capital manager, invests in and finances residential and commercial assets. The company invests in various types of agency mortgage-backed securities, non-agency residential mortgage assets, and residential mortgage loans; and originates and invests in commercial mortgage loans, securities, and other commercial real estate investments. It also provides financing to private equity-backed middle market businesses; and operates as a broker-dealer. The company has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. Annaly Capital Management, Inc. was founded in 1996 and is based in New York, New York.

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