Two Harbors Investment Corp

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TWO : NYSE : Financial
$9.62 -0.16 | -1.64%
Today's Range: 9.54 - 9.67
Avg. Daily Volume: 2529100.0
03/29/17 - 4:01 PM ET

Financial Analysis


TWO HARBORS INVESTMENT CORP's gross profit margin for the fourth quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Sales and net income have grown, and although the growth in revenues has outpaced the average competitor within the industry, the net income growth has not.

During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing by 4.90% from the same quarter last year.

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Income Statement Q4 FY16 Q4 FY15
Net Sales ($mil)305.38251.39
EBITDA ($mil)0.0213.9
EBIT ($mil)269.88213.54
Net Income ($mil)341.4210.71


Balance Sheet Q4 FY16 Q4 FY15
Cash & Equiv. ($mil)815.21000.39
Total Assets ($mil)20112.0614575.77
Total Debt ($mil)16423.5510793.38
Equity ($mil)3401.113576.56


Profitability Q4 FY16 Q4 FY15
Gross Profit Margin88.3885.09
EBITDA Margin0.085.08
Operating Margin88.3884.94
Sales Turnover0.030.07
Return on Assets1.753.37
Return on Equity10.3813.76
Debt Q4 FY16 Q4 FY15
Current Ratio0.00.0
Debt/Capital0.830.75
Interest Expense-111.760.0
Interest Coverage-2.410.0


Share Data Q4 FY16 Q4 FY15
Shares outstanding (mil)347.65353.91
Div / share0.240.26
EPS0.980.59
Book value / share9.7810.11
Institutional Own % n/a n/a
Avg Daily Volume2462795.02510685.0

Valuation


HOLD. This stock's P/E ratio indicates a discount compared to an average of 12.60 for the Mortgage REITs industry and a significant discount compared to the S&P 500 average of 26.33. Conducting a second comparison, its price-to-book ratio of 0.99 indicates a significant discount versus the S&P 500 average of 2.93 and a discount versus the industry average of 1.01. The current price-to-sales ratio is well above the S&P 500 average and above the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, TWO HARBORS INVESTMENT CORP proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
TWO 9.53 Peers 12.60   TWO NA Peers 8.21

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

TWO is trading at a discount to its peers.

 

Neutral. The P/CF ratio is the stock’s price divided by the sum of the company's cash flow from operations. It is useful for comparing companies with different capital requirements or financing structures.

Ratio not available.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
TWO 9.72 Peers 9.64   TWO NM Peers 0.88

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

TWO is trading at a valuation on par with its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

TWO's negative PEG ratio makes this valuation measure meaningless.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
TWO 0.99 Peers 1.01   TWO -25.00 Peers 297.13

Average. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

TWO is trading at a valuation on par with its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, TWO is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
TWO 4.87 Peers 4.81   TWO -29.20 Peers 9.67

Average. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

TWO is trading at a valuation on par with its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

TWO significantly trails its peers on the basis of sales growth

 

 

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