PennyMac Mortgage Investment Trust (NYSE:PMT – Get Free Report) and Lument Finance Trust (NYSE:LFT – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, profitability, analyst recommendations, institutional ownership and valuation.
Volatility & Risk
PennyMac Mortgage Investment Trust has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, Lument Finance Trust has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.
Profitability
This table compares PennyMac Mortgage Investment Trust and Lument Finance Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| PennyMac Mortgage Investment Trust | 47.79% | 12.50% | 0.76% |
| Lument Finance Trust | -18.00% | 0.86% | 0.12% |
Dividends
Analyst Ratings
This is a breakdown of current recommendations and price targets for PennyMac Mortgage Investment Trust and Lument Finance Trust, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| PennyMac Mortgage Investment Trust | 2 | 4 | 3 | 0 | 2.11 |
| Lument Finance Trust | 1 | 0 | 0 | 0 | 1.00 |
PennyMac Mortgage Investment Trust currently has a consensus price target of $11.50, suggesting a potential upside of 23.59%. Given PennyMac Mortgage Investment Trust’s stronger consensus rating and higher possible upside, equities analysts plainly believe PennyMac Mortgage Investment Trust is more favorable than Lument Finance Trust.
Insider & Institutional Ownership
67.4% of PennyMac Mortgage Investment Trust shares are held by institutional investors. Comparatively, 19.5% of Lument Finance Trust shares are held by institutional investors. 1.0% of PennyMac Mortgage Investment Trust shares are held by insiders. Comparatively, 3.3% of Lument Finance Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Earnings & Valuation
This table compares PennyMac Mortgage Investment Trust and Lument Finance Trust”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| PennyMac Mortgage Investment Trust | $307.46 million | 2.64 | $127.87 million | $1.42 | 6.55 |
| Lument Finance Trust | $79.00 million | 0.46 | -$2.74 million | ($0.36) | -1.93 |
PennyMac Mortgage Investment Trust has higher revenue and earnings than Lument Finance Trust. Lument Finance Trust is trading at a lower price-to-earnings ratio than PennyMac Mortgage Investment Trust, indicating that it is currently the more affordable of the two stocks.
Summary
PennyMac Mortgage Investment Trust beats Lument Finance Trust on 13 of the 17 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 Lument Finance Trust
Lument Finance Trust, Inc., a real estate investment trust, focuses on investing in, financing, and managing a portfolio of commercial real estate (CRE) debt investments in the United States. The company primarily invests in transitional floating rate CRE mortgage loans on middle market multi-family assets; and other CRE -related investments, including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans, and other CRE debt instruments. Lument Finance Trust, Inc. is qualified as a real estate investment trust (REIT) under the Internal Revenue Code of 1986. As a REIT, it would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Hunt Companies Finance Trust, Inc. and changed its name to Lument Finance Trust, Inc. in December 2020. Lument Finance Trust, Inc. was incorporated in 2012 and is headquartered in New York, New York.
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