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TWO HARBORS INVESTMENT CORP (TWO) Stock Fundamental Analysis

NYSE:TWO - New York Stock Exchange, Inc. - US90187B8046 - REIT - Currency: USD

12.76  +0.11 (+0.87%)

After market: 12.85 +0.09 (+0.71%)

Fundamental Rating

3

We assign a fundamental rating of 3 out of 10 to TWO. TWO was compared to 64 industry peers in the Mortgage Real Estate Investment Trusts (REITs)" industry. TWO has a bad profitability rating. Also its financial health evaluation is rather negative. TWO has a decent growth rate and is not valued too expensively.


Dividend Valuation Growth Profitability Health

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1

1. Profitability

1.1 Basic Checks

TWO had positive earnings in the past year.
TWO had a positive operating cash flow in the past year.
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 4 of the past 5 years.
TWO Yearly Net Income VS EBIT VS OCF VS FCFTWO Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 500M -500M 1B -1B -1.5B

1.2 Ratios

TWO's Return On Assets of -2.07% is on the low side compared to the rest of the industry. TWO is outperformed by 92.19% of its industry peers.
Looking at the Return On Equity, with a value of -12.31%, TWO is doing worse than 95.31% of the companies in the same industry.
Industry RankSector Rank
ROA -2.07%
ROE -12.31%
ROIC N/A
ROA(3y)0.42%
ROA(5y)-1.36%
ROE(3y)2.07%
ROE(5y)-8.8%
ROIC(3y)N/A
ROIC(5y)N/A
TWO Yearly ROA, ROE, ROICTWO Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 -20 -40

1.3 Margins

TWO has a Gross Margin of 0.94%. This is amonst the worse of the industry: TWO underperforms 92.19% of its industry peers.
TWO's Gross Margin has declined in the last couple of years.
The Profit Margin and Operating Margin are not available for TWO so they could not be analyzed.
Industry RankSector Rank
OM N/A
PM (TTM) N/A
GM 0.94%
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-68.99%
GM growth 5Y-27.55%
TWO Yearly Profit, Operating, Gross MarginsTWO Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 50 100 150

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2

2. Health

2.1 Basic Checks

TWO has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
TWO Yearly Shares OutstandingTWO Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 20M 40M 60M 80M 100M
TWO Yearly Total Debt VS Total AssetsTWO Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 10B 20B 30B

2.2 Solvency

TWO has an Altman-Z score of -1.17. 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 -1.17, TWO is doing worse than 96.88% of the companies in the same industry.
The Debt to FCF ratio of TWO is 30.22, which is on the high side as it means it would take TWO, 30.22 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of TWO (30.22) is better than 76.56% of its industry peers.
A Debt/Equity ratio of 4.62 is on the high side and indicates that TWO has dependencies on debt financing.
The Debt to Equity ratio of TWO (4.62) is comparable to the rest of the industry.
Industry RankSector Rank
Debt/Equity 4.62
Debt/FCF 30.22
Altman-Z -1.17
ROIC/WACCN/A
WACCN/A
TWO Yearly LT Debt VS Equity VS FCFTWO Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 2B 4B 6B

2.3 Liquidity

TWO has a Current Ratio of 0.09. 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 worse Current ratio (0.09) than 70.31% of its industry peers.
TWO has a Quick Ratio of 0.09. 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 worse Quick ratio (0.09) than 70.31% of its industry peers.
Industry RankSector Rank
Current Ratio 0.09
Quick Ratio 0.09
TWO Yearly Current Assets VS Current LiabilitesTWO Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 5B 10B 15B 20B 25B

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5

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 885.71% over the past year.
TWO shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -36.86% yearly.
EPS 1Y (TTM)885.71%
EPS 3Y-44.86%
EPS 5Y-36.86%
EPS Q2Q%281.82%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%23.62%

3.2 Future

TWO is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 89.07% yearly.
The Revenue is expected to grow by 36.44% on average over the next years. This is a very strong growth
EPS Next Y231.46%
EPS Next 2Y89.07%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue Next Year61.37%
Revenue Next 2Y36.44%
Revenue Next 3YN/A
Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
TWO Yearly Revenue VS EstimatesTWO Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 0 500M -500M 1B -1B
TWO Yearly EPS VS EstimatesTWO Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 0 2 4 6 8

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6

4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 23.20, TWO is valued on the expensive side.
TWO's Price/Earnings is on the same level as the industry average.
When comparing the Price/Earnings ratio of TWO to the average of the S&P500 Index (28.47), we can say TWO is valued inline with the index average.
The Price/Forward Earnings ratio is 7.00, which indicates a rather cheap valuation of TWO.
Based on the Price/Forward Earnings ratio, TWO is valued cheaper than 82.81% of the companies in the same industry.
TWO's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 92.74.
Industry RankSector Rank
PE 23.2
Fwd PE 7
TWO Price Earnings VS Forward Price EarningsTWO Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60 80

4.2 Price Multiples

Based on the Price/Free Cash Flow ratio, TWO is valued cheaply inside the industry as 96.88% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 3.99
EV/EBITDA N/A
TWO Per share dataTWO EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 5 10 15 20

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.
TWO's earnings are expected to grow with 89.07% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.1
PEG (5Y)N/A
EPS Next 2Y89.07%
EPS Next 3YN/A

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5

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 14.12%, TWO is a good candidate for dividend investing.
TWO's Dividend Yield is a higher than the industry average which is at 13.24.
Compared to an average S&P500 Dividend Yield of 2.28, TWO pays a better dividend.
Industry RankSector Rank
Dividend Yield 14.12%

5.2 History

The dividend of TWO decreases each year by -15.93%.
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)-15.93%
Div Incr Years1
Div Non Decr Years1
TWO Yearly Dividends per shareTWO Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 20 40 60 80 100

5.3 Sustainability

The earnings of TWO are negative and hence is the payout ratio. TWO will probably not be able to sustain this dividend level.
DP-86.86%
EPS Next 2Y89.07%
EPS Next 3YN/A
TWO Yearly Income VS Free CF VS DividendTWO Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 500M -500M 1B -1B -1.5B

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TWO HARBORS INVESTMENT CORP

NYSE:TWO (2/4/2025, 8:12:52 PM)

After market: 12.85 +0.09 (+0.71%)

12.76

+0.11 (+0.87%)

Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryMortgage Real Estate Investment Trusts (REITs)"
Earnings (Last)01-29 2025-01-29/amc
Earnings (Next)N/A N/A
Inst Owners66.79%
Inst Owner Change-0.2%
Ins Owners0.68%
Ins Owner Change11.18%
Market Cap1.32B
Analysts75.71
Price Target13.86 (8.62%)
Short Float %3.28%
Short Ratio2.63
Dividend
Industry RankSector Rank
Dividend Yield 14.12%
Yearly Dividend2.61
Dividend Growth(5Y)-15.93%
DP-86.86%
Div Incr Years1
Div Non Decr Years1
Ex-Date01-03 2025-01-03 (0.45)
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-54.07%
Min EPS beat(2)-61.58%
Max EPS beat(2)-46.57%
EPS beat(4)0
Avg EPS beat(4)-71.41%
Min EPS beat(4)-95.36%
Max EPS beat(4)-46.57%
EPS beat(8)0
Avg EPS beat(8)-79.47%
EPS beat(12)2
Avg EPS beat(12)-53.36%
EPS beat(16)4
Avg EPS beat(16)-38.95%
Revenue beat(2)0
Avg Revenue beat(2)-31.63%
Min Revenue beat(2)-41.49%
Max Revenue beat(2)-21.78%
Revenue beat(4)0
Avg Revenue beat(4)-87.78%
Min Revenue beat(4)-160.98%
Max Revenue beat(4)-21.78%
Revenue beat(8)0
Avg Revenue beat(8)-6794.49%
Revenue beat(12)4
Avg Revenue beat(12)-4112.95%
Revenue beat(16)7
Avg Revenue beat(16)-3025.79%
PT rev (1m)0.35%
PT rev (3m)-9.23%
EPS NQ rev (1m)26.71%
EPS NQ rev (3m)-17.48%
EPS NY rev (1m)5.7%
EPS NY rev (3m)-3.99%
Revenue NQ rev (1m)17.98%
Revenue NQ rev (3m)-104.79%
Revenue NY rev (1m)1.73%
Revenue NY rev (3m)-80.3%
Valuation
Industry RankSector Rank
PE 23.2
Fwd PE 7
P/S 1.57
P/FCF 3.99
P/OCF 3.99
P/B 0.61
P/tB 0.61
EV/EBITDA N/A
EPS(TTM)0.55
EY4.31%
EPS(NY)1.82
Fwd EY14.29%
FCF(TTM)3.2
FCFY25.09%
OCF(TTM)3.2
OCFY25.09%
SpS8.1
BVpS20.93
TBVpS20.93
PEG (NY)0.1
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA -2.07%
ROE -12.31%
ROCE N/A
ROIC N/A
ROICexc N/A
ROICexgc N/A
OM N/A
PM (TTM) N/A
GM 0.94%
FCFM 39.51%
ROA(3y)0.42%
ROA(5y)-1.36%
ROE(3y)2.07%
ROE(5y)-8.8%
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 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-68.99%
GM growth 5Y-27.55%
F-Score3
Asset Turnover0.07
Health
Industry RankSector Rank
Debt/Equity 4.62
Debt/FCF 30.22
Debt/EBITDA N/A
Cap/Depr N/A
Cap/Sales N/A
Interest Coverage N/A
Cash Conversion N/A
Profit Quality N/A
Current Ratio 0.09
Quick Ratio 0.09
Altman-Z -1.17
F-Score3
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 Y231.46%
EPS Next 2Y89.07%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%23.62%
Revenue Next Year61.37%
Revenue Next 2Y36.44%
Revenue Next 3YN/A
Revenue Next 5YN/A
EBIT growth 1Y-246.35%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-23%
FCF growth 3Y-18.37%
FCF growth 5Y-13.34%
OCF growth 1Y-23%
OCF growth 3Y-18.37%
OCF growth 5Y-13.34%