TWO HARBORS INVESTMENT CORP (TWO) Stock Fundamental Analysis
NYSE:TWO - New York Stock Exchange, Inc. - US90187B8046 - REIT - Currency: USD
TWO gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 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
In the past year TWO was profitable.
In the past year TWO had a positive cash flow from operations.
The reported net income has been mixed in the past 5 years: TWO reported negative net income in multiple years.
TWO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 1.15%, TWO belongs to the best 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.
With an excellent Return On Invested Capital value of 1.74%, TWO belongs to the best of the industry, outperforming 86.36% of the companies in the same industry.
| 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.
TWO's Profit Margin has improved in the last couple of years.
The Operating Margin of TWO (21.52%) is better than 83.33% of its industry peers.
In the last couple of years the Operating Margin of TWO has grown nicely.
TWO has a Gross Margin of 38.60%. This is amongst the best in the industry. TWO outperforms 83.33% of its industry peers.
TWO's Gross Margin has improved in the last couple of years.
| 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
The number of shares outstanding for TWO has been increased compared to 1 year ago.
TWO has more shares outstanding than it did 5 years ago.
The debt/assets ratio for TWO has been reduced compared to a year ago.
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.
Looking at the Altman-Z score, with a value of -0.98, TWO is doing worse than 90.91% of the companies in the same industry.
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.
Looking at the Debt to FCF ratio, with a value of 34.03, TWO is in the better half of the industry, outperforming 77.27% of the companies in the same industry.
A Debt/Equity ratio of 5.10 is on the high side and indicates that TWO has dependencies on debt 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
A Current Ratio of 0.15 indicates that TWO may have some problems paying its short term obligations.
The Current ratio of TWO (0.15) is comparable to the rest of the industry.
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.
With a Quick ratio value of 0.15, TWO perfoms like the industry average, 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.
Measured over the past years, TWO shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -36.86% on average per year.
TWO shows a small growth in Revenue. In the last year, the Revenue has grown by 4.77%.
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
The Earnings Per Share is expected to grow by 41.11% on average over the next years. This is a very strong growth
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 13.68, TWO is valued correctly.
Based on the Price/Earnings ratio, TWO is valued a bit cheaper than the industry average as 62.12% of the companies are valued more expensively.
TWO's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 27.41.
With a Price/Forward Earnings ratio of 6.79, 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 80.30% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 35.19. TWO is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.68 | ||
| Fwd PE | 6.79 |
4.2 Price Multiples
Based on the Price/Free Cash Flow ratio, TWO is valued cheaper than 98.48% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 3.27 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
TWO's 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.
A more expensive valuation may be justified as TWO's earnings are expected to grow with 41.11% in the coming years.
PEG (NY)0.09
PEG (5Y)N/A
EPS Next 2Y64.67%
EPS Next 3Y41.11%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 16.71%, TWO is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 11.56, TWO pays a better dividend. On top of this TWO pays more dividend than 92.42% of the companies listed 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 paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)-22.81%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
TWO pays out 149.30% of its income as dividend. This is not a sustainable payout ratio.
DP149.3%
EPS Next 2Y64.67%
EPS Next 3Y41.11%
10.12
-0.16 (-1.56%)
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 Cap1.05B
Analysts75.71
Price Target13.66 (34.98%)
Short Float %6.94%
Short Ratio4.26
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 | 13.68 | ||
| Fwd PE | 6.79 | ||
| P/S | 0.85 | ||
| P/FCF | 3.27 | ||
| P/OCF | 3.27 | ||
| P/B | 0.49 | ||
| P/tB | 0.49 | ||
| EV/EBITDA | N/A |
EPS(TTM)0.74
EY7.31%
EPS(NY)1.49
Fwd EY14.74%
FCF(TTM)3.09
FCFY30.55%
OCF(TTM)3.09
OCFY30.55%
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%