TWO HARBORS INVESTMENT CORP (TWO) Stock Fundamental Analysis
NYSE:TWO - New York Stock Exchange, Inc. - US90187B8046 - REIT - Currency: USD
Taking everything into account, TWO scores 5 out of 10 in our fundamental rating. TWO was compared to 65 industry peers in the Mortgage Real Estate Investment Trusts (REITs)" industry. TWO scores excellent on profitability, but there are concerns on its financial health. TWO may be a bit undervalued, certainly considering the very reasonable score on growth
1. Profitability
1.1 Basic Checks
TWO had positive earnings in the past year.
In the past year TWO had a positive cash flow from operations.
In multiple years TWO reported negative net income over the last 5 years.
In the past 5 years TWO always reported a positive cash flow from operatings.
1.2 Ratios
TWO has a Return On Assets of 3.61%. This is amongst the best in the industry. TWO outperforms 95.38% of its industry peers.
TWO has a Return On Equity of 20.78%. This is amongst the best in the industry. TWO outperforms 100.00% of its industry peers.
With an excellent Return On Invested Capital value of 4.26%, TWO belongs to the best of the industry, outperforming 93.85% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.61% | ||
| ROE | 20.78% | ||
| ROIC | 4.26% |
ROA(3y)0.75%
ROA(5y)-1.08%
ROE(3y)4.44%
ROE(5y)-7.45%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
The Profit Margin of TWO (28.11%) is better than 89.23% of its industry peers.
In the last couple of years the Profit Margin of TWO has grown nicely.
TWO has a better Operating Margin (35.85%) than 90.77% of its industry peers.
In the last couple of years the Operating Margin of TWO has grown nicely.
TWO has a Gross Margin of 49.34%. This is amongst the best in the industry. TWO outperforms 86.15% of its industry peers.
In the last couple of years the Gross Margin of TWO has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 35.85% | ||
| PM (TTM) | 28.11% | ||
| GM | 49.34% |
OM growth 3Y-12.74%
OM growth 5Y2.85%
PM growth 3Y-8.93%
PM growth 5Y1.71%
GM growth 3Y-9.32%
GM growth 5Y7.66%
2. Health
2.1 Basic Checks
TWO has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, TWO has more shares outstanding
The debt/assets ratio for TWO has been reduced compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of -0.87, we must say that TWO is in the distress zone and has some risk of bankruptcy.
With a Altman-Z score value of -0.87, TWO is not doing good in the industry: 81.54% of the companies in the same industry are doing better.
The Debt to FCF ratio of TWO is 45.21, which is on the high side as it means it would take TWO, 45.21 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of TWO (45.21) is better than 63.08% of its industry peers.
A Debt/Equity ratio of 4.28 is on the high side and indicates that TWO has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 4.28, TWO is in line with its industry, outperforming 50.77% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 4.28 | ||
| Debt/FCF | 45.21 | ||
| Altman-Z | -0.87 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
A Current Ratio of 0.11 indicates that TWO may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.11, TWO is doing worse than 60.00% of the companies in the same industry.
A Quick Ratio of 0.11 indicates that TWO may have some problems paying its short term obligations.
TWO has a worse Quick ratio (0.11) than 60.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.11 | ||
| Quick Ratio | 0.11 |
3. Growth
3.1 Past
TWO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 772.73%, which is quite impressive.
The earnings per share for TWO have been decreasing by -36.86% on average. This is quite bad
Looking at the last year, TWO shows a very strong growth in Revenue. The Revenue has grown by 47.92%.
TWO shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -1.54% yearly.
EPS 1Y (TTM)772.73%
EPS 3Y-44.86%
EPS 5Y-36.86%
EPS Q2Q%380%
Revenue 1Y (TTM)47.92%
Revenue growth 3Y37.26%
Revenue growth 5Y-1.54%
Sales Q2Q%51.84%
3.2 Future
TWO is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 52.99% yearly.
The Revenue is expected to grow by 3.77% on average over the next years.
EPS Next Y208.97%
EPS Next 2Y69.9%
EPS Next 3Y52.99%
EPS Next 5YN/A
Revenue Next Year32.64%
Revenue Next 2Y22.15%
Revenue Next 3Y3.77%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
TWO is valuated correctly with a Price/Earnings ratio of 16.19.
TWO's Price/Earnings is on the same level as the industry average.
The average S&P500 Price/Earnings ratio is at 24.83. TWO is valued slightly cheaper when compared to this.
TWO is valuated cheaply with a Price/Forward Earnings ratio of 7.55.
Based on the Price/Forward Earnings ratio, TWO is valued a bit cheaper than the industry average as 69.23% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 20.94. TWO is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.19 | ||
| Fwd PE | 7.55 |
4.2 Price Multiples
Based on the Price/Free Cash Flow ratio, TWO is valued a bit cheaper than 80.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.2 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of TWO may justify a higher PE ratio.
TWO's earnings are expected to grow with 52.99% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.08
PEG (5Y)N/A
EPS Next 2Y69.9%
EPS Next 3Y52.99%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 15.18%, TWO is a good candidate for dividend investing.
TWO's Dividend Yield is a higher than the industry average which is at 14.03.
TWO's Dividend Yield is rather good when compared to the S&P500 average which is at 2.41.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 15.18% |
5.2 History
The dividend of TWO decreases each year by -22.81%.
TWO has been paying a dividend for at least 10 years, so it has a reliable track record.
The dividend of TWO decreased recently.
Dividend Growth(5Y)-22.81%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
53.29% of the earnings are spent on dividend by TWO. This is a bit on the high side, but may be sustainable.
DP53.29%
EPS Next 2Y69.9%
EPS Next 3Y52.99%
11.98
+0.22 (+1.87%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryMortgage Real Estate Investment Trusts (REITs)"
Earnings (Last)
Earnings (Next)
Inst Owners71.97%
Inst Owner Change-0.45%
Ins Owners1.01%
Ins Owner Change12.04%
Market Cap1.25B
Analysts75.71
Price Target14.13 (17.95%)
Short Float %3.47%
Short Ratio2.22
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 15.18% |
Yearly Dividend2.27
Dividend Growth(5Y)-22.81%
DP53.29%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-51.67%
Min EPS beat(2)-61.58%
Max EPS beat(2)-41.76%
EPS beat(4)0
Avg EPS beat(4)-58.01%
Min EPS beat(4)-82.14%
Max EPS beat(4)-41.76%
EPS beat(8)0
Avg EPS beat(8)-78.28%
EPS beat(12)1
Avg EPS beat(12)-57.12%
EPS beat(16)3
Avg EPS beat(16)-43.25%
Revenue beat(2)0
Avg Revenue beat(2)-26.28%
Min Revenue beat(2)-30.77%
Max Revenue beat(2)-21.78%
Revenue beat(4)0
Avg Revenue beat(4)-55.23%
Min Revenue beat(4)-126.86%
Max Revenue beat(4)-21.78%
Revenue beat(8)0
Avg Revenue beat(8)-6698.87%
Revenue beat(12)3
Avg Revenue beat(12)-4123.7%
Revenue beat(16)6
Avg Revenue beat(16)-3050.98%
PT rev (1m)-2.02%
PT rev (3m)2.02%
EPS NQ rev (1m)0.31%
EPS NQ rev (3m)-4.97%
EPS NY rev (1m)0.45%
EPS NY rev (3m)-6.79%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0%
Revenue NY rev (1m)18.47%
Revenue NY rev (3m)6.64%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.19 | ||
| Fwd PE | 7.55 | ||
| P/S | 0.79 | ||
| P/FCF | 6.2 | ||
| P/OCF | 6.2 | ||
| P/B | 0.59 | ||
| P/tB | 0.59 | ||
| EV/EBITDA | N/A |
EPS(TTM)0.74
EY6.18%
EPS(NY)1.59
Fwd EY13.25%
FCF(TTM)1.93
FCFY16.13%
OCF(TTM)1.93
OCFY16.13%
SpS15.08
BVpS20.4
TBVpS20.4
PEG (NY)0.08
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.61% | ||
| ROE | 20.78% | ||
| ROCE | 15.61% | ||
| ROIC | 4.26% | ||
| ROICexc | 4.46% | ||
| ROICexgc | 4.56% | ||
| OM | 35.85% | ||
| PM (TTM) | 28.11% | ||
| GM | 49.34% | ||
| FCFM | 12.81% |
ROA(3y)0.75%
ROA(5y)-1.08%
ROE(3y)4.44%
ROE(5y)-7.45%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3Y18.51%
ROICexcg growth 5Y28.04%
ROICexc growth 3Y18.92%
ROICexc growth 5Y27.73%
OM growth 3Y-12.74%
OM growth 5Y2.85%
PM growth 3Y-8.93%
PM growth 5Y1.71%
GM growth 3Y-9.32%
GM growth 5Y7.66%
F-Score7
Asset Turnover0.13
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 4.28 | ||
| Debt/FCF | 45.21 | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 0.91 | ||
| Cash Conversion | N/A | ||
| Profit Quality | 45.57% | ||
| Current Ratio | 0.11 | ||
| Quick Ratio | 0.11 | ||
| Altman-Z | -0.87 |
F-Score7
WACCN/A
ROIC/WACCN/A
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)772.73%
EPS 3Y-44.86%
EPS 5Y-36.86%
EPS Q2Q%380%
EPS Next Y208.97%
EPS Next 2Y69.9%
EPS Next 3Y52.99%
EPS Next 5YN/A
Revenue 1Y (TTM)47.92%
Revenue growth 3Y37.26%
Revenue growth 5Y-1.54%
Sales Q2Q%51.84%
Revenue Next Year32.64%
Revenue Next 2Y22.15%
Revenue Next 3Y3.77%
Revenue Next 5YN/A
EBIT growth 1Y1078.73%
EBIT growth 3Y19.78%
EBIT growth 5Y1.26%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-41.49%
FCF growth 3Y-22%
FCF growth 5Y-28.24%
OCF growth 1Y-41.49%
OCF growth 3Y-22%
OCF growth 5Y-28.24%