Reviewing ARMOUR Residential REIT (NYSE:ARR) and AGNC Investment (NASDAQ:AGNC)

ARMOUR Residential REIT (NYSE:ARR) and AGNC Investment (NASDAQ:AGNC) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, institutional ownership, valuation, risk and dividends.

Profitability

This table compares ARMOUR Residential REIT and AGNC Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARMOUR Residential REIT	-4.55%	15.89%	1.64%
AGNC Investment	11.50%	19.32%	1.71%

Risk and Volatility

ARMOUR Residential REIT has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500. Comparatively, AGNC Investment has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.

Insider and Institutional Ownership

54.2% of ARMOUR Residential REIT shares are held by institutional investors. Comparatively, 38.3% of AGNC Investment shares are held by institutional investors. 0.4% of ARMOUR Residential REIT shares are held by company insiders. Comparatively, 0.4% of AGNC Investment shares are held by company 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 recent recommendations and price targets for ARMOUR Residential REIT and AGNC Investment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARMOUR Residential REIT	0	5	1	0	2.17
AGNC Investment	0	3	5	0	2.63

ARMOUR Residential REIT currently has a consensus price target of $15.50, suggesting a potential downside of 0.16%. AGNC Investment has a consensus price target of $9.63, suggesting a potential downside of 3.85%. Given ARMOUR Residential REIT’s higher probable upside, research analysts plainly believe ARMOUR Residential REIT is more favorable than AGNC Investment.

Earnings & Valuation

This table compares ARMOUR Residential REIT and AGNC Investment”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARMOUR Residential REIT	-$21.36 million	-66.56	-$14.39 million	($0.24)	-64.69
AGNC Investment	$2.95 billion	3.54	$863.00 million	$0.34	29.44

AGNC Investment has higher revenue and earnings than ARMOUR Residential REIT. ARMOUR Residential REIT is trading at a lower price-to-earnings ratio than AGNC Investment, indicating that it is currently the more affordable of the two stocks.

Dividends

ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 18.6%. AGNC Investment pays an annual dividend of $1.44 per share and has a dividend yield of 14.4%. ARMOUR Residential REIT pays out -1,200.0% of its earnings in the form of a dividend. AGNC Investment pays out 423.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ARMOUR Residential REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

AGNC Investment beats ARMOUR Residential REIT on 11 of the 16 factors compared between the two stocks.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. Its securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans; and unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.

About AGNC Investment

AGNC Investment Corp., formerly American Capital Agency Corp., is a real estate investment trust. The Company invests in agency residential mortgage-backed securities on a leveraged basis. Its investments consist of residential mortgage pass-through securities and collateralized mortgage obligations (CMOs) for which the principal and interest payments are guaranteed by a government-sponsored enterprise, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), or by the United States Government agency, such as the Government National Mortgage Association (Ginnie Mae) (collectively, GSEs). Its agency securities include agency residential mortgage-backed securities (Agency RMBS) and to-be-announced forward contracts (TBAs). Its Non-Agency Securities include credit risk transfer securities (CRT), non-agency residential mortgage-backed securities (Non-Agency RMBS) and commercial mortgage-backed securities (CMBS).