Critical Survey: PennyMac Mortgage Investment Trust (NYSE:PMT) versus Essential Properties Realty Trust (NYSE:EPRT)

PennyMac Mortgage Investment Trust (NYSE:PMT) and Essential Properties Realty Trust (NYSE:EPRT) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, valuation, institutional ownership and earnings.

Volatility and Risk

PennyMac Mortgage Investment Trust has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500. Comparatively, Essential Properties Realty Trust has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500.

Earnings & Valuation

This table compares PennyMac Mortgage Investment Trust and Essential Properties Realty Trust”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PennyMac Mortgage Investment Trust	$255.13 million	4.70	$199.65 million	$1.50	9.20
Essential Properties Realty Trust	$359.60 million	15.64	$190.71 million	$1.23	26.07

PennyMac Mortgage Investment Trust has higher earnings, but lower revenue than Essential Properties Realty Trust. PennyMac Mortgage Investment Trust is trading at a lower price-to-earnings ratio than Essential Properties Realty Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares PennyMac Mortgage Investment Trust and Essential Properties Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PennyMac Mortgage Investment Trust	47.60%	13.29%	1.48%
Essential Properties Realty Trust	48.12%	6.28%	3.96%

Dividends

PennyMac Mortgage Investment Trust pays an annual dividend of $1.60 per share and has a dividend yield of 11.6%. Essential Properties Realty Trust pays an annual dividend of $1.16 per share and has a dividend yield of 3.6%. PennyMac Mortgage Investment Trust pays out 106.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Essential Properties Realty Trust pays out 94.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider and Institutional Ownership

67.4% of PennyMac Mortgage Investment Trust shares are held by institutional investors. Comparatively, 97.0% of Essential Properties Realty Trust shares are held by institutional investors. 0.9% of PennyMac Mortgage Investment Trust shares are held by insiders. Comparatively, 0.8% of Essential Properties Realty Trust shares are held by 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.

Analyst Recommendations

This is a summary of recent recommendations and price targets for PennyMac Mortgage Investment Trust and Essential Properties Realty Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PennyMac Mortgage Investment Trust	0	4	3	0	2.43
Essential Properties Realty Trust	0	2	11	0	2.85

PennyMac Mortgage Investment Trust presently has a consensus target price of $14.93, indicating a potential upside of 8.18%. Essential Properties Realty Trust has a consensus target price of $31.73, indicating a potential downside of 1.06%. Given PennyMac Mortgage Investment Trust’s higher probable upside, analysts clearly believe PennyMac Mortgage Investment Trust is more favorable than Essential Properties Realty Trust.

Summary

Essential Properties Realty Trust beats PennyMac Mortgage Investment Trust on 9 of the 16 factors compared between the two stocks.

About PennyMac Mortgage Investment Trust

PennyMac Mortgage Investment Trust, through its subsidiary, primarily invests in mortgage-related assets in the United States. The company operates through: Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production segments. Its Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, subordinate mortgage-backed securities (MBS), distressed loans, and real estate. The company's Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency MBS, as well as related interest rate hedging activities. Its Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. The company primarily sells its loans to government-sponsored entities or PennyMac Loan Services, LLC. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its shareholders. The company was incorporated in 2009 and is headquartered in Westlake Village, California.

About Essential Properties Realty Trust

Essential Properties Realty Trust, Inc., a real estate company, acquires, owns, and manages single-tenant properties in the United States. The company leases its properties to middle-market companies, such as restaurants, car washes, automotive services, medical and dental services, convenience stores, equipment rental, entertainment, early childhood education, grocery, and health and fitness on a long-term basis. As of December 31, 2021, it had a portfolio of 1, 451 properties. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2016 and is headquartered in Princeton, New Jersey.