Annaly Capital Management (NYSE:NLY) and Braemar Hotels & Resorts (NYSE:BHR) Critical Contrast

Braemar Hotels & Resorts (NYSE:BHR) and Annaly Capital Management (NYSE:NLY) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, risk, valuation, dividends and profitability.

Risk and Volatility

Braemar Hotels & Resorts has a beta of 2.04, meaning that its share price is 104% more volatile than the S&P 500. Comparatively, Annaly Capital Management has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500.

Insider and Institutional Ownership

64.8% of Braemar Hotels & Resorts shares are held by institutional investors. Comparatively, 51.6% of Annaly Capital Management shares are held by institutional investors. 1.8% of Braemar Hotels & Resorts shares are held by insiders. Comparatively, 0.2% of Annaly Capital Management shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations for Braemar Hotels & Resorts and Annaly Capital Management, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Braemar Hotels & Resorts	0	1	0	0	2.00
Annaly Capital Management	0	1	8	0	2.89

Braemar Hotels & Resorts currently has a consensus price target of $2.50, indicating a potential downside of 17.49%. Annaly Capital Management has a consensus price target of $21.50, indicating a potential upside of 13.28%. Given Annaly Capital Management’s stronger consensus rating and higher probable upside, analysts plainly believe Annaly Capital Management is more favorable than Braemar Hotels & Resorts.

Valuation & Earnings

This table compares Braemar Hotels & Resorts and Annaly Capital Management”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Braemar Hotels & Resorts	$732.60 million	0.28	-$27.02 million	($0.77)	-3.94
Annaly Capital Management	$320.33 million	33.21	-$1.64 billion	($0.07)	-271.14

Braemar Hotels & Resorts has higher revenue and earnings than Annaly Capital Management. Annaly Capital Management is trading at a lower price-to-earnings ratio than Braemar Hotels & Resorts, indicating that it is currently the more affordable of the two stocks.

Dividends

Braemar Hotels & Resorts pays an annual dividend of $0.20 per share and has a dividend yield of 6.6%. Annaly Capital Management pays an annual dividend of $2.60 per share and has a dividend yield of 13.7%. Braemar Hotels & Resorts pays out -26.0% of its earnings in the form of a dividend. Annaly Capital Management pays out -3,714.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Annaly Capital Management is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Braemar Hotels & Resorts and Annaly Capital Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Braemar Hotels & Resorts	-0.30%	-0.78%	-0.10%
Annaly Capital Management	2.59%	14.75%	1.57%

Summary

Annaly Capital Management beats Braemar Hotels & Resorts on 10 of the 16 factors compared between the two stocks.

About Braemar Hotels & Resorts

Braemar Hotels & Resorts is a conservatively capitalized REIT that invests primarily in high RevPAR, full-service luxury hotels and resorts. We are listed on the New York Stock Exchange under the symbol BHR and are externally-advised by Ashford (NYSE American: AINC).

About Annaly Capital Management

Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.