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 65 industry peers in the Mortgage Real Estate Investment Trusts (REITs)" industry. TWO has an excellent profitability rating, but there are concerns on its financial health. TWO scores decently on growth, while it is valued quite cheap. This could make an interesting combination.
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.
In multiple years TWO reported negative net income over the last 5 years.
TWO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
TWO has a better Return On Assets (3.61%) than 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.
TWO's Return On Invested Capital of 4.26% is amongst the best of the industry. TWO outperforms 93.85% of its industry peers.
| 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
Looking at the Profit Margin, with a value of 28.11%, TWO belongs to the top of the industry, outperforming 89.23% of the companies in the same industry.
In the last couple of years the Profit Margin of TWO has grown nicely.
TWO has a Operating Margin of 35.85%. This is amongst the best in the industry. TWO outperforms 90.77% of its industry peers.
In the last couple of years the Operating Margin of TWO has grown nicely.
TWO's Gross Margin of 49.34% is amongst the best of 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
Compared to 1 year ago, TWO has more shares outstanding
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
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: 80.00% of the companies in the same industry are doing better.
TWO has a debt to FCF ratio of 45.21. This is a negative value and a sign of low solvency as TWO would need 45.21 years to pay back of all of its debts.
With a Debt to FCF ratio value of 45.21, TWO perfoms like the industry average, outperforming 60.00% of the companies in the same industry.
TWO has a Debt/Equity ratio of 4.28. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 4.28, TWO perfoms like the industry average, 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 61.54% of the companies in the same industry.
TWO has a Quick Ratio of 0.11. 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 0.11, TWO is doing worse than 61.54% of the companies in the same industry.
| 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 885.71%, 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 grown by 103.77% in the past year. This is a very strong growth!
The Revenue has been decreasing by -1.54% on average over the past years.
EPS 1Y (TTM)885.71%
EPS 3Y-44.86%
EPS 5Y-36.86%
EPS Q2Q%281.82%
Revenue 1Y (TTM)103.77%
Revenue growth 3Y37.26%
Revenue growth 5Y-1.54%
Sales Q2Q%23.61%
3.2 Future
The Earnings Per Share is expected to grow by 52.99% on average over the next years. This is a very strong growth
Based on estimates for the next years, TWO will show a decrease in Revenue. The Revenue will decrease by -2.15% on average per year.
EPS Next Y208.97%
EPS Next 2Y69.9%
EPS Next 3Y52.99%
EPS Next 5YN/A
Revenue Next Year17.38%
Revenue Next 2Y-2.15%
Revenue Next 3YN/A
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
With a Price/Earnings ratio of 21.40, TWO is valued on the expensive side.
Compared to the rest of the industry, the Price/Earnings ratio of TWO is on the same level as its industry peers.
When comparing the Price/Earnings ratio of TWO to the average of the S&P500 Index (28.92), we can say TWO is valued slightly cheaper.
With a Price/Forward Earnings ratio of 6.93, the valuation of TWO can be described as very cheap.
86.15% of the companies in the same industry are more expensive than TWO, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 21.65. TWO is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.4 | ||
| Fwd PE | 6.93 |
4.2 Price Multiples
Based on the Price/Free Cash Flow ratio, TWO is valued a bit cheaper than 78.46% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.09 | ||
| 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.
TWO's earnings are expected to grow with 52.99% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.1
PEG (5Y)N/A
EPS Next 2Y69.9%
EPS Next 3Y52.99%
5. Dividend
5.1 Amount
TWO has a Yearly Dividend Yield of 16.41%, which is a nice return.
Compared to an average industry Dividend Yield of 14.86, TWO pays a bit more dividend than its industry peers.
TWO's Dividend Yield is rather good when compared to the S&P500 average which is at 2.51.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 16.41% |
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.
TWO has decreased its dividend 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%
11.77
+0.29 (+2.53%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryMortgage Real Estate Investment Trusts (REITs)"
Earnings (Last)
Earnings (Next)
Inst Owners71.97%
Inst Owner Change0.37%
Ins Owners1.01%
Ins Owner Change12.04%
Market Cap1.22B
Analysts75.71
Price Target14.43 (22.6%)
Short Float %3.07%
Short Ratio2.14
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 16.41% |
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)0%
PT rev (3m)4.49%
EPS NQ rev (1m)-2.13%
EPS NQ rev (3m)-4.01%
EPS NY rev (1m)-2.99%
EPS NY rev (3m)-6.6%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-16.74%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-112.26%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.4 | ||
| Fwd PE | 6.93 | ||
| P/S | 0.78 | ||
| P/FCF | 6.09 | ||
| P/OCF | 6.09 | ||
| P/B | 0.58 | ||
| P/tB | 0.58 | ||
| EV/EBITDA | N/A |
EPS(TTM)0.55
EY4.67%
EPS(NY)1.7
Fwd EY14.44%
FCF(TTM)1.93
FCFY16.42%
OCF(TTM)1.93
OCFY16.42%
SpS15.09
BVpS20.4
TBVpS20.4
PEG (NY)0.1
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)885.71%
EPS 3Y-44.86%
EPS 5Y-36.86%
EPS Q2Q%281.82%
EPS Next Y208.97%
EPS Next 2Y69.9%
EPS Next 3Y52.99%
EPS Next 5YN/A
Revenue 1Y (TTM)103.77%
Revenue growth 3Y37.26%
Revenue growth 5Y-1.54%
Sales Q2Q%23.61%
Revenue Next Year17.38%
Revenue Next 2Y-2.15%
Revenue Next 3YN/A
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%