Two Harbors Investment Corp

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TWO : NYSE : Financial
$8.725 -0.045 | -0.51%
Today's Range: 8.72 - 8.79
Avg. Daily Volume: 2501200.0
01/24/17 - 3:59 PM ET

Financial Analysis


TWO HARBORS INVESTMENT CORP's gross profit margin for the third quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Even though sales decreased, the net income has increased.

During the same period, stockholders' equity ("net worth") has decreased by 7.80% from the same quarter last year.

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Income Statement Q3 FY16 Q3 FY15
Net Sales ($mil)194.23204.97
EBITDA ($mil)157.23166.64
EBIT ($mil)156.91166.29
Net Income ($mil)117.79-34.79


Balance Sheet Q3 FY16 Q3 FY15
Cash & Equiv. ($mil)953.291195.87
Total Assets ($mil)21799.917785.31
Total Debt ($mil)18043.2813683.7
Equity ($mil)3478.243772.74


Profitability Q3 FY16 Q3 FY15
Gross Profit Margin80.9581.3
EBITDA Margin80.9481.3
Operating Margin80.7981.13
Sales Turnover0.030.05
Return on Assets1.021.37
Return on Equity6.396.48
Debt Q3 FY16 Q3 FY15
Current Ratio0.00.0
Debt/Capital0.840.78
Interest Expense54.770.0
Interest Coverage2.870.0


Share Data Q3 FY16 Q3 FY15
Shares outstanding (mil)347.64366.16
Div / share0.230.26
EPS0.34-0.09
Book value / share10.0110.3
Institutional Own % n/a n/a
Avg Daily Volume2505319.01963084.0

Valuation


HOLD. TWO HARBORS INVESTMENT CORP's P/E ratio indicates a significant discount compared to an average of 33.77 for the Mortgage REITs industry and a significant discount compared to the S&P 500 average of 25.41. Conducting a second comparison, its price-to-book ratio of 0.88 indicates a significant discount versus the S&P 500 average of 2.83 and a discount versus the industry average of 0.94. 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 13.94 Peers 33.77   TWO NM Peers 11.85

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

TWO is trading at a significant discount to its peers.

 

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

TWO's P/CF is negative making the measure meaningless.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
TWO 8.96 Peers 10.08   TWO NM Peers 0.60

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 0.88 Peers 0.94   TWO -5.98 Peers 187.71

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 4.77 Peers 4.52   TWO -28.44 Peers 7.75

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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