Two Harbors Investment Corp

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TWO : NYSE : Financial
$8.53 -0.04 | -0.47%
Today's Range: 8.53 - 8.62
Avg. Daily Volume: 1,699,700
09/30/16 - 4:03 PM ET

Financial Analysis


TWO HARBORS INVESTMENT CORP's gross profit margin for the second quarter of its fiscal year 2016 has significantly decreased when compared to the same period a year ago. Sales and net income fell significantly; although net income growth outperformed the average competitor in its industry, revenue growth did not.

During the same period, stockholders' equity ("net worth") has decreased by 13.93% from the same quarter last year.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)72.42241.52
EBITDA ($mil)35.27204.95
EBIT ($mil)34.93204.62
Net Income ($mil)-16.98221.5


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)1055.351344.48
Total Assets ($mil)20740.4418447.72
Total Debt ($mil)16781.7114137.54
Equity ($mil)3418.073971.57


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin48.784.86
EBITDA Margin48.784.86
Operating Margin48.2484.72
Sales Turnover0.030.05
Return on Assets0.332.56
Return on Equity2.0411.9
Debt Q2 FY16 Q2 FY15
Current Ratio0.00.0
Debt/Capital0.830.78
Interest Expense66.680.0
Interest Coverage0.520.0


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)347.62367.53
Div / share0.230.26
EPS-0.050.6
Book value / share9.8310.81
Institutional Own % n/a n/a
Avg Daily Volume1860173.02857229.0

Valuation


SELL. TWO HARBORS INVESTMENT CORP's P/E ratio indicates a significant premium compared to an average of 27.49 for the Mortgage REITs industry and a significant premium compared to the S&P 500 average of 25.19. Conducting a second comparison, its price-to-book ratio of 0.91 indicates a significant discount versus the S&P 500 average of 2.82 and a discount versus the industry average of 0.96. The current price-to-sales ratio is well above the S&P 500 average and above the industry average, indicating a premium. The valuation analysis reveals that, TWO HARBORS INVESTMENT CORP seems to be trading at a premium 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 44.85 Peers 27.49   TWO NM Peers 13.67

Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.

TWO is trading at a significant premium 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 9.44 Peers 22.28   TWO NM Peers 1.75

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

TWO is trading at a significant discount to 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 0.91 Peers 0.96   TWO -84.50 Peers -819.41

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.

 

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

TWO is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
TWO 4.79 Peers 4.50   TWO -28.87 Peers 6.22

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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