TWO HARBORS INVESTMENT CORP (TWO) Stock Fundamental Analysis
NYSE:TWO - New York Stock Exchange, Inc. - US90187B8046 - REIT - Currency: USD
We assign a fundamental rating of 5 out of 10 to TWO. TWO was compared to 66 industry peers in the Mortgage Real Estate Investment Trusts (REITs)" industry. While TWO has a great profitability rating, there are quite some concerns on its financial health. TWO is valued quite cheap, but it does not seem to be growing.
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
Looking at the Return On Assets, with a value of 1.15%, TWO belongs to the top of the industry, outperforming 84.85% of the companies in the same industry.
TWO's Return On Equity of 7.33% is amongst the best of the industry. TWO outperforms 89.39% of its industry peers.
TWO has a Return On Invested Capital of 1.74%. This is amongst the best in the industry. TWO outperforms 86.36% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.15% | ||
| ROE | 7.33% | ||
| ROIC | 1.74% |
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
TWO has a Profit Margin of 12.66%. This is in the better half of the industry: TWO outperforms 75.76% of its industry peers.
In the last couple of years the Profit Margin of TWO has grown nicely.
TWO has a better Operating Margin (21.52%) than 83.33% of its industry peers.
In the last couple of years the Operating Margin of TWO has grown nicely.
TWO's Gross Margin of 38.60% is amongst the best of the industry. TWO outperforms 83.33% of its industry peers.
In the last couple of years the Gross Margin of TWO has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.52% | ||
| PM (TTM) | 12.66% | ||
| GM | 38.6% |
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
Compared to 1 year ago, TWO has more shares outstanding
The number of shares outstanding for TWO has been increased compared to 5 years ago.
TWO has a better debt/assets ratio than last year.
2.2 Solvency
TWO has an Altman-Z score of -0.98. This is a bad value and indicates that TWO is not financially healthy and even has some risk of bankruptcy.
TWO has a worse Altman-Z score (-0.98) than 90.91% of its industry peers.
TWO has a debt to FCF ratio of 34.03. This is a negative value and a sign of low solvency as TWO would need 34.03 years to pay back of all of its debts.
TWO has a better Debt to FCF ratio (34.03) than 77.27% of its industry peers.
TWO has a Debt/Equity ratio of 5.10. This is a high value indicating a heavy dependency on external financing.
TWO's Debt to Equity ratio of 5.10 is in line compared to the rest of the industry. TWO outperforms 45.45% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 5.1 | ||
| Debt/FCF | 34.03 | ||
| Altman-Z | -0.98 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
TWO has a Current Ratio of 0.15. This is a bad value and indicates that TWO is not financially healthy enough and could expect problems in meeting its short term obligations.
TWO has a Current ratio (0.15) which is in line with its industry peers.
TWO has a Quick Ratio of 0.15. This is a bad value and indicates that TWO is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.15, TWO is in line with its industry, outperforming 43.94% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.15 | ||
| Quick Ratio | 0.15 |
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.
TWO shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -36.86% yearly.
The Revenue has been growing slightly by 4.77% in the past year.
Measured over the past years, TWO shows a decrease in Revenue. The Revenue has been decreasing by -1.54% on average per year.
EPS 1Y (TTM)772.73%
EPS 3Y-44.86%
EPS 5Y-36.86%
EPS Q2Q%380%
Revenue 1Y (TTM)4.77%
Revenue growth 3Y37.26%
Revenue growth 5Y-1.54%
Sales Q2Q%51.84%
3.2 Future
Based on estimates for the next years, TWO will show a very strong growth in Earnings Per Share. The EPS will grow by 41.11% on average per year.
TWO is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -4.62% yearly.
EPS Next Y153.42%
EPS Next 2Y64.67%
EPS Next 3Y41.11%
EPS Next 5YN/A
Revenue Next Year31.22%
Revenue Next 2Y20.22%
Revenue Next 3Y-4.62%
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 decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
TWO is valuated correctly with a Price/Earnings ratio of 13.56.
TWO's Price/Earnings ratio is a bit cheaper when compared to the industry. TWO is cheaper than 62.12% of the companies in the same industry.
TWO's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 27.51.
Based on the Price/Forward Earnings ratio of 6.73, the valuation of TWO can be described as very cheap.
TWO's Price/Forward Earnings ratio is rather cheap when compared to the industry. TWO is cheaper than 81.82% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 35.58, TWO is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.56 | ||
| Fwd PE | 6.73 |
4.2 Price Multiples
TWO's Price/Free Cash Flow ratio is rather cheap when compared to the industry. TWO is cheaper than 98.48% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 3.25 | ||
| 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 41.11% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.09
PEG (5Y)N/A
EPS Next 2Y64.67%
EPS Next 3Y41.11%
5. Dividend
5.1 Amount
TWO has a Yearly Dividend Yield of 16.71%, which is a nice return.
TWO's Dividend Yield is rather good when compared to the industry average which is at 11.56. TWO pays more dividend than 92.42% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.35, TWO pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 16.71% |
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.
Dividend Growth(5Y)-22.81%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
149.30% of the earnings are spent on dividend by TWO. This is not a sustainable payout ratio.
DP149.3%
EPS Next 2Y64.67%
EPS Next 3Y41.11%
NYSE:TWO (7/15/2025, 11:06:08 AM)
10.035
-0.08 (-0.84%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryMortgage Real Estate Investment Trusts (REITs)"
Earnings (Last)
Earnings (Next)
Inst Owners69.84%
Inst Owner Change0.01%
Ins Owners0.86%
Ins Owner Change1.06%
Market Cap1.04B
Analysts75.71
Price Target13.66 (36.12%)
Short Float %7.56%
Short Ratio4.3
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 16.71% |
Yearly Dividend2.27
Dividend Growth(5Y)-22.81%
DP149.3%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-40.64%
Min EPS beat(2)-44.22%
Max EPS beat(2)-37.05%
EPS beat(4)0
Avg EPS beat(4)-47.35%
Min EPS beat(4)-61.58%
Max EPS beat(4)-37.05%
EPS beat(8)0
Avg EPS beat(8)-72.01%
EPS beat(12)1
Avg EPS beat(12)-59.64%
EPS beat(16)3
Avg EPS beat(16)-43.99%
Revenue beat(2)1
Avg Revenue beat(2)1.36%
Min Revenue beat(2)-30.77%
Max Revenue beat(2)33.5%
Revenue beat(4)1
Avg Revenue beat(4)-15.14%
Min Revenue beat(4)-41.49%
Max Revenue beat(4)33.5%
Revenue beat(8)1
Avg Revenue beat(8)-6527.53%
Revenue beat(12)3
Avg Revenue beat(12)-4388.58%
Revenue beat(16)6
Avg Revenue beat(16)-3080.63%
PT rev (1m)-2.34%
PT rev (3m)-5.3%
EPS NQ rev (1m)-3.91%
EPS NQ rev (3m)-12.08%
EPS NY rev (1m)1.47%
EPS NY rev (3m)-17.61%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)10.97%
Revenue NY rev (1m)-2.11%
Revenue NY rev (3m)16.75%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.56 | ||
| Fwd PE | 6.73 | ||
| P/S | 0.84 | ||
| P/FCF | 3.25 | ||
| P/OCF | 3.25 | ||
| P/B | 0.49 | ||
| P/tB | 0.49 | ||
| EV/EBITDA | N/A |
EPS(TTM)0.74
EY7.37%
EPS(NY)1.49
Fwd EY14.86%
FCF(TTM)3.09
FCFY30.81%
OCF(TTM)3.09
OCFY30.81%
SpS11.94
BVpS20.64
TBVpS20.64
PEG (NY)0.09
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.15% | ||
| ROE | 7.33% | ||
| ROCE | 7.62% | ||
| ROIC | 1.74% | ||
| ROICexc | 1.82% | ||
| ROICexgc | 1.86% | ||
| OM | 21.52% | ||
| PM (TTM) | 12.66% | ||
| GM | 38.6% | ||
| FCFM | 25.89% |
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 Turnover0.09
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 5.1 | ||
| Debt/FCF | 34.03 | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 0.51 | ||
| Cash Conversion | N/A | ||
| Profit Quality | 204.39% | ||
| Current Ratio | 0.15 | ||
| Quick Ratio | 0.15 | ||
| Altman-Z | -0.98 |
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 Y153.42%
EPS Next 2Y64.67%
EPS Next 3Y41.11%
EPS Next 5YN/A
Revenue 1Y (TTM)4.77%
Revenue growth 3Y37.26%
Revenue growth 5Y-1.54%
Sales Q2Q%51.84%
Revenue Next Year31.22%
Revenue Next 2Y20.22%
Revenue Next 3Y-4.62%
Revenue Next 5YN/A
EBIT growth 1Y-20.15%
EBIT growth 3Y19.78%
EBIT growth 5Y1.26%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-52.34%
FCF growth 3Y-22%
FCF growth 5Y-28.24%
OCF growth 1Y-52.34%
OCF growth 3Y-22%
OCF growth 5Y-28.24%