Financial Analysis: BrightSpire Capital (NYSE:BRSP) vs. Dynex Capital (NYSE:DX)


BrightSpire Capital (NYSE:BRSP – Get Rating) and Dynex Capital (NYSE:DX – Get Rating) are both small cap finance companies, but which business is superior? We’ll compare the two companies based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Dividends

BrightSpire Capital pays an annual dividend of $0.72 per share and has a dividend yield of 7.9%. Dynex Capital pays an annual dividend of $1.56 per share and has a dividend yield of 9.8%. BrightSpire Capital pays -93.5% of its earnings as a dividend. Dynex Capital pays 45.2% of its profits as a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings over the next few years.

Profitability

This table compares the net margins, return on equity and return on assets of BrightSpire Capital and Dynex Capital.

Net margins Return on equity return on assets
BrightSpire Capital -75.88% 6.36% 1.90%
Dynex Capital 170.29% 9.87% 1.92%

Institutional and insider ownership

67.6% of shares in BrightSpire Capital are held by institutional investors. By comparison, 40.9% of Dynex Capital shares are held by institutional investors. 1.0% of shares of BrightSpire Capital are held by insiders of the company. By comparison, 2.8% of Dynex Capital shares are held by insiders of the company. Strong institutional ownership is an indication that endowments, large fund managers, and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for BrightSpire Capital and Dynex Capital, as provided by MarketBeat.

Sales Ratings Hold odds Buy reviews Strong buy odds Rating
BrightSpire Capital 0 1 3 0 2.75
Dynex Capital 0 1 1 0 2.50

BrightSpire Capital currently has a consensus price target of $11.25, suggesting a potential upside of 23.36%. Dynex Capital has a consensus price target of $20.00, suggesting a potential upside of 25.71%. Given Dynex Capital’s possible higher upside, analysts clearly believe that Dynex Capital is more favorable than BrightSpire Capital.

Risk and Volatility

BrightSpire Capital has a beta of 1.71, which means its stock price is 71% more volatile than the S&P 500. In comparison, Dynex Capital has a beta of 1.17, which means its stock price is 17% more volatile than the S&P 500.

Valuation and benefits

This table compares the revenue, earnings per share (EPS), and valuation of BrightSpire Capital and Dynex Capital.

Gross revenue Price/sales ratio Net revenue Earnings per share Price/earnings ratio
BrightSpire Capital $119.51 million 9.89 -$101.05 million ($0.77) -11.84
Dynex Capital $60.05 million 9.72 $102.26 million $3.45 4.61

Dynex Capital has lower revenues, but higher profits than BrightSpire Capital. BrightSpire Capital trades at a lower price-to-earnings ratio than Dynex Capital, indicating that it is currently the more affordable of the two stocks.

Summary

Dynex Capital beats BrightSpire Capital on 9 out of 16 factors compared between the two stocks.

About BrightSpire Capital (Get an evaluation)

BrightSpire Capital, Inc. operates as a commercial real estate investment trust (CRE) in the United States. It focuses on originating, acquiring, financing and managing a portfolio of CRE first mortgages, mezzanine loans, preferred stocks, debt securities and net leased properties. The Company is considered a real estate investment trust for federal income tax purposes. The company was formerly known as Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.

About Dynex Capital (Get an evaluation)

Dynex Capital, Inc., a mortgage real estate investment trust, invests in mortgage-backed securities (MBS) on a leveraged basis in the United States. It invests in agency and non-agency MBS composed of residential MBS, commercial MBS (CMBS) and interest-only securities CMBS. Agency MBS has a principal payment guarantee from a US government agency or US government sponsored entity, such as Fannie Mae and Freddie Mac. Non-agency MBS have no such payment guarantee. The Company qualifies as a real estate investment trust for federal income tax purposes. It would generally not be subject to federal income tax if it distributed at least 90% of its taxable income to its shareholders. The company was incorporated in 1987 and is based in Glen Allen, Virginia.



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Sarah J. Greer