Invesco Mortgage Capital (NYSE:IVR) & Generation Income Properties (NASDAQ:GIPR) Critical Analysis

Generation Income Properties (NASDAQ:GIPR) and Invesco Mortgage Capital (NYSE:IVR) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Volatility & Risk

Generation Income Properties has a beta of -0.05, indicating that its stock price is 105% less volatile than the S&P 500. Comparatively, Invesco Mortgage Capital has a beta of 1.77, indicating that its stock price is 77% more volatile than the S&P 500.

Insider and Institutional Ownership

20.7% of Generation Income Properties shares are held by institutional investors. Comparatively, 40.5% of Invesco Mortgage Capital shares are held by institutional investors. 5.6% of Generation Income Properties shares are held by insiders. Comparatively, 0.3% of Invesco Mortgage Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for Generation Income Properties and Invesco Mortgage Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Generation Income Properties	1	0	0	0	1.00
Invesco Mortgage Capital	1	3	0	0	1.75

Invesco Mortgage Capital has a consensus target price of $7.50, indicating a potential downside of 3.41%. Given Invesco Mortgage Capital’s stronger consensus rating and higher possible upside, analysts plainly believe Invesco Mortgage Capital is more favorable than Generation Income Properties.

Profitability

This table compares Generation Income Properties and Invesco Mortgage Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Generation Income Properties	-105.40%	-247.43%	-8.66%
Invesco Mortgage Capital	13.77%	30.04%	2.91%

Dividends

Generation Income Properties pays an annual dividend of $0.46 per share and has a dividend yield of 44.2%. Invesco Mortgage Capital pays an annual dividend of $1.36 per share and has a dividend yield of 17.5%. Generation Income Properties pays out -24.2% of its earnings in the form of a dividend. Invesco Mortgage Capital pays out 266.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Generation Income Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Generation Income Properties and Invesco Mortgage Capital”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Generation Income Properties	$9.88 million	0.57	-$8.35 million	($1.90)	-0.55
Invesco Mortgage Capital	$72.30 million	7.12	$59.88 million	$0.51	15.23

Invesco Mortgage Capital has higher revenue and earnings than Generation Income Properties. Generation Income Properties is trading at a lower price-to-earnings ratio than Invesco Mortgage Capital, indicating that it is currently the more affordable of the two stocks.

Summary

Invesco Mortgage Capital beats Generation Income Properties on 12 of the 15 factors compared between the two stocks.

About Generation Income Properties

Generation Income Properties, Inc., located in Tampa, Florida, is an internally managed real estate investment trust formed to acquire and own, directly and jointly, real estate investments focused on retail, office, and industrial net lease properties in densely populated submarkets.

About Invesco Mortgage Capital

Invesco Mortgage Capital Inc. operates as a real estate investment trust (REIT) that invests, finances, and manages mortgage-backed securities and other mortgage-related assets in the United States. It invests in residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS) that are guaranteed by a U.S. government agency or federally chartered corporation; RMBS and CMBS that are not issued or guaranteed by the United States government agency or federally chartered corporation; the United States treasury securities; real estate-related financing arrangements; to-be-announced securities forward contracts to purchase RMBS; and commercial mortgage loans. It has elected to be taxed as a REIT and would be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2008 and is headquartered in Atlanta, Georgia.