Critical Analysis: Hersha Hospitality Trust (NYSE:HT) & PennyMac Mortgage Investment Trust (NYSE:PMT)

Hersha Hospitality Trust (NYSE:HT) and PennyMac Mortgage Investment Trust (NYSE:PMT) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Earnings & Valuation

This table compares Hersha Hospitality Trust and PennyMac Mortgage Investment Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hersha Hospitality Trust $529.96 million 0.37 -$3.67 million $1.94 2.17
PennyMac Mortgage Investment Trust $488.82 million 2.12 $226.36 million $2.42 4.27

PennyMac Mortgage Investment Trust has lower revenue, but higher earnings than Hersha Hospitality Trust. Hersha Hospitality 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.

Institutional & Insider Ownership

76.1% of Hersha Hospitality Trust shares are owned by institutional investors. Comparatively, 73.1% of PennyMac Mortgage Investment Trust shares are owned by institutional investors. 11.8% of Hersha Hospitality Trust shares are owned by insiders. Comparatively, 2.5% of PennyMac Mortgage Investment Trust shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Hersha Hospitality Trust and PennyMac Mortgage Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hersha Hospitality Trust -0.76% -0.45% -0.19%
PennyMac Mortgage Investment Trust 46.31% 12.68% 2.29%

Volatility and Risk

Hersha Hospitality Trust has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, PennyMac Mortgage Investment Trust has a beta of 0.75, meaning that its stock price is 25% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Hersha Hospitality Trust and PennyMac Mortgage Investment Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hersha Hospitality Trust 4 3 0 0 1.43
PennyMac Mortgage Investment Trust 0 2 4 0 2.67

Hersha Hospitality Trust currently has a consensus target price of $8.07, suggesting a potential upside of 91.72%. PennyMac Mortgage Investment Trust has a consensus target price of $23.30, suggesting a potential upside of 125.56%. Given PennyMac Mortgage Investment Trust’s stronger consensus rating and higher possible upside, analysts plainly believe PennyMac Mortgage Investment Trust is more favorable than Hersha Hospitality Trust.

Dividends

Hersha Hospitality Trust pays an annual dividend of $1.12 per share and has a dividend yield of 26.6%. PennyMac Mortgage Investment Trust pays an annual dividend of $1.88 per share and has a dividend yield of 18.2%. Hersha Hospitality Trust pays out 57.7% of its earnings in the form of a dividend. PennyMac Mortgage Investment Trust pays out 77.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hersha Hospitality Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

PennyMac Mortgage Investment Trust beats Hersha Hospitality Trust on 10 of the 16 factors compared between the two stocks.

About Hersha Hospitality Trust

Hersha Hospitality Trust (HT) is a self-advised real estate investment trust in the hospitality sector, which owns and operates high quality upscale, luxury and lifestyle hotels in urban gateway markets and coastal destinations. The Company's 48 hotels totaling 7,644 rooms are located in New York, Washington, DC, Boston, Philadelphia, South Florida and select markets on the West Coast. The Company's common shares are traded on The New York Stock Exchange under the ticker “HT”.

About PennyMac Mortgage Investment Trust

PennyMac Mortgage Investment Trust, a specialty finance company, invests primarily in residential mortgage loans and mortgage-related assets in the United States. The company's Correspondent Production segment engages in purchasing, pooling, and reselling newly originated prime credit mortgage loans directly or in the form of mortgage-backed securities (MBS). Its Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, firm commitment to purchase CRT securities, distressed mortgage loans, real estate acquired in settlement of mortgage loans, non-Agency subordinated bonds, and small balance commercial real estate mortgage loans. 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; and interest rate hedging activities related to indebtedness. PNMAC Capital Management, LLC acts as the manager of PennyMac Mortgage Investment Trust. 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 stockholders. The company was founded in 2009 and is based in Westlake Village, California.

Receive News & Ratings for Hersha Hospitality Trust Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Hersha Hospitality Trust and related companies with MarketBeat.com's FREE daily email newsletter.