Reviewing DiamondRock Hospitality (NYSE:DRH) and AGNC Investment (NASDAQ:AGNC)

DiamondRock Hospitality (NYSE:DRH) and AGNC Investment (NASDAQ:AGNC) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for DiamondRock Hospitality and AGNC Investment, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DiamondRock Hospitality	0	3	3	0	2.50
AGNC Investment	0	4	6	0	2.60

DiamondRock Hospitality presently has a consensus target price of $9.92, indicating a potential upside of 15.18%. AGNC Investment has a consensus target price of $10.13, indicating a potential downside of 4.12%. Given DiamondRock Hospitality’s higher possible upside, equities analysts clearly believe DiamondRock Hospitality is more favorable than AGNC Investment.

Profitability

This table compares DiamondRock Hospitality and AGNC Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DiamondRock Hospitality	6.43%	4.31%	2.19%
AGNC Investment	16.15%	26.21%	2.36%

Insider & Institutional Ownership

38.3% of AGNC Investment shares are held by institutional investors. 1.4% of DiamondRock Hospitality shares are held by insiders. Comparatively, 0.5% of AGNC Investment shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares DiamondRock Hospitality and AGNC Investment”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DiamondRock Hospitality	$1.11 billion	1.64	$86.34 million	$0.36	23.92
AGNC Investment	$514.00 million	14.93	$155.00 million	$0.91	11.60

AGNC Investment has lower revenue, but higher earnings than DiamondRock Hospitality. AGNC Investment is trading at a lower price-to-earnings ratio than DiamondRock Hospitality, indicating that it is currently the more affordable of the two stocks.

Dividends

DiamondRock Hospitality pays an annual dividend of $0.12 per share and has a dividend yield of 1.4%. AGNC Investment pays an annual dividend of $1.44 per share and has a dividend yield of 13.6%. DiamondRock Hospitality pays out 33.3% of its earnings in the form of a dividend. AGNC Investment pays out 158.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

DiamondRock Hospitality has a beta of 1.6, meaning that its share price is 60% more volatile than the S&P 500. Comparatively, AGNC Investment has a beta of 1.47, meaning that its share price is 47% more volatile than the S&P 500.

Summary

AGNC Investment beats DiamondRock Hospitality on 10 of the 16 factors compared between the two stocks.

About DiamondRock Hospitality

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in leisure destinations and top gateway markets. The Company currently owns 36 premium quality hotels with over 9,700 rooms. The Company has strategically positioned its portfolio to be operated both under leading global brand families as well as independent boutique hotels in the lifestyle segment.

About AGNC Investment

AGNC Investment Corp., formerly American Capital Agency Corp., is a real estate investment trust. The Company invests in agency residential mortgage-backed securities on a leveraged basis. Its investments consist of residential mortgage pass-through securities and collateralized mortgage obligations (CMOs) for which the principal and interest payments are guaranteed by a government-sponsored enterprise, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), or by the United States Government agency, such as the Government National Mortgage Association (Ginnie Mae) (collectively, GSEs). Its agency securities include agency residential mortgage-backed securities (Agency RMBS) and to-be-announced forward contracts (TBAs). Its Non-Agency Securities include credit risk transfer securities (CRT), non-agency residential mortgage-backed securities (Non-Agency RMBS) and commercial mortgage-backed securities (CMBS).