Contrasting Cherry Hill Mortgage Investment (NYSE:CHMI) & Franklin Street Properties (NYSE:FSP)

Franklin Street Properties (NYSE:FSPGet Free Report) and Cherry Hill Mortgage Investment (NYSE:CHMIGet Free Report) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Insider and Institutional Ownership

76.2% of Franklin Street Properties shares are held by institutional investors. Comparatively, 13.7% of Cherry Hill Mortgage Investment shares are held by institutional investors. 5.3% of Franklin Street Properties shares are held by company insiders. Comparatively, 1.1% of Cherry Hill Mortgage Investment shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Franklin Street Properties and Cherry Hill Mortgage Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Franklin Street Properties -35.87% -7.26% -4.54%
Cherry Hill Mortgage Investment -72.66% 19.43% 1.99%

Earnings & Valuation

This table compares Franklin Street Properties and Cherry Hill Mortgage Investment’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Franklin Street Properties $165.62 million 1.45 $1.09 million ($0.53) -4.38
Cherry Hill Mortgage Investment $29.64 million 3.17 $21.74 million ($2.00) -1.74

Cherry Hill Mortgage Investment has lower revenue, but higher earnings than Franklin Street Properties. Franklin Street Properties is trading at a lower price-to-earnings ratio than Cherry Hill Mortgage Investment, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Franklin Street Properties has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500. Comparatively, Cherry Hill Mortgage Investment has a beta of 1.47, indicating that its share price is 47% more volatile than the S&P 500.

Dividends

Franklin Street Properties pays an annual dividend of $0.04 per share and has a dividend yield of 1.7%. Cherry Hill Mortgage Investment pays an annual dividend of $0.60 per share and has a dividend yield of 17.2%. Franklin Street Properties pays out -7.5% of its earnings in the form of a dividend. Cherry Hill Mortgage Investment pays out -30.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cherry Hill Mortgage Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current ratings and price targets for Franklin Street Properties and Cherry Hill Mortgage Investment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franklin Street Properties 0 0 1 0 3.00
Cherry Hill Mortgage Investment 0 0 2 0 3.00

Franklin Street Properties presently has a consensus target price of $2.50, suggesting a potential upside of 7.76%. Cherry Hill Mortgage Investment has a consensus target price of $5.50, suggesting a potential upside of 58.05%. Given Cherry Hill Mortgage Investment’s higher possible upside, analysts clearly believe Cherry Hill Mortgage Investment is more favorable than Franklin Street Properties.

Summary

Cherry Hill Mortgage Investment beats Franklin Street Properties on 10 of the 15 factors compared between the two stocks.

About Franklin Street Properties

(Get Free Report)

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on infill and central business district (CBD) office properties in the U.S. Sunbelt and Mountain West, as well as select opportunistic markets. FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes.

About Cherry Hill Mortgage Investment

(Get Free Report)

Cherry Hill Mortgage Investment Corporation, a residential real estate finance company, acquires, invests in, and manages residential mortgage assets in the United States. The company operates through Investments in RMBS (residential mortgage-backed securities), Investments in Servicing Related Assets, and All Other segments. It manages a portfolio of servicing related assets and RMBS. Cherry Hill Mortgage Investment Corporation qualifies as a real estate investment trust for federal income tax purposes. The company generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Cherry Hill Mortgage Investment Corporation was incorporated in 2012 and is based in Farmingdale, New Jersey.

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