Aytu BioScience Inc. (AYTU) and Two Harbors Investment Corp. (TWO) both have caught the attention of the investment community that recently hit new highs. This price action has ruffled more than a few feathers in the investment community, but is one a better investment than the other? To answer this, we will compare the two companies across growth, profitability, risk, return, dividends, and valuation measures.
The company has grown sales at a 492.80% annual rate over the past five years, putting it in the medium growth category. In terms of efficiency, AYTU has an asset turnover ratio of 0.2. This figure represents the amount of revenue a company generates per dollar of assets. AYTU’s financial leverage ratio is 3.34, which indicates that the company’s asset base is primarily funded by debt. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is -227.30%, which is worse than the Biotechnology industry average ROE.
Aytu BioScience Inc. (AYTU) free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is -37.5. All else equal, companies with higher FCF yields are viewed as cheaper. The average investment recommendation for AYTU, taken from a group of Wall Street Analysts, is 1.50, or a Strong Sell.
Over the past six months, Aytu BioScience Inc. insiders have been net sellers, acquiring a net of 20.23 million shares. This implies that insiders have been feeling relatively bullish about the outlook for AYTU. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. AYTU has a beta of 0.35 and therefore an below average level of market volatility.
Two Harbors Investment Corp. (NYSE:TWO) operates in the REIT – Mortgage segment of the Real Estate sector. TWO has increased sales at a 29.60% CAGR over the past five years, and is considered a medium growth stock. The company has a net profit margin of 20.20% and is less profitable than the average REIT – Mortgage player. TWO’s asset turnover ratio is 0.02 and the company has financial leverage of 6.18. Company is therefore mostly financed by debt. TWO’s return on equity of 6.30% is better than the REIT – Mortgage industry average.
Two Harbors Investment Corp. (TWO) pays a dividend of 0.20, which translates to dividend yield of 4.61% based on the current price. Stock has a payout ratio of 184.40%. According to this ratio, TWO should be able to continue making payouts at these levels. The company trades at a free cash flow yield of 6.22 and has a P/E of 5.23. Compared to the average company in the 12.28 space, TWO is relatively cheap. The average analyst recommendation for TWO is 2.20, or a Moderate Sell.
Two Harbors Investment Corp. insiders have bought a net of 383924.0 shares during the past three months, which implies that the company’s top executives have been feeling bullish about the stock’s outlook. Finally, TWO’s beta of 1.66 indicates that the stock has an above average level of market risk.
Aytu BioScience Inc. (NASDAQ:AYTU) scores higher than Two Harbors Investment Corp. (NYSE:TWO) on 6 of the 8 measures compared between the two companies. AYTU has the better fundamentals, scoring higher on efficiency, leverage metrics. AYTU has better insider activity and sentiment signals.
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May 04, 2020 at 07:40PM
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Aytu BioScience Inc. (AYTU) vs. Two Harbors Investment Corp. (TWO): Breaking Down the Data - Weekly Oracle
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