Comparing Paramount Group (NYSE:PGRE) & Annaly Capital Management (NYSE:NLY)

Paramount Group (NYSE:PGRE) and Annaly Capital Management (NYSE:NLY) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Profitability

This table compares Paramount Group and Annaly Capital Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Paramount Group	-34.97%	-6.07%	-3.13%
Annaly Capital Management	-8.38%	15.20%	1.64%

Earnings & Valuation

This table compares Paramount Group and Annaly Capital Management’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Paramount Group	$742.79 million	1.37	-$259.74 million	($1.20)	-3.89
Annaly Capital Management	$3.73 billion	2.53	-$1.64 billion	($0.97)	-19.46

Paramount Group has higher earnings, but lower revenue than Annaly Capital Management. Annaly Capital Management is trading at a lower price-to-earnings ratio than Paramount Group, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and target prices for Paramount Group and Annaly Capital Management, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paramount Group	2	2	1	0	1.80
Annaly Capital Management	0	2	5	0	2.71

Paramount Group presently has a consensus target price of $4.60, suggesting a potential downside of 1.50%. Annaly Capital Management has a consensus target price of $21.07, suggesting a potential upside of 11.61%. Given Annaly Capital Management’s stronger consensus rating and higher probable upside, analysts plainly believe Annaly Capital Management is more favorable than Paramount Group.

Insider & Institutional Ownership

65.6% of Paramount Group shares are owned by institutional investors. Comparatively, 51.6% of Annaly Capital Management shares are owned by institutional investors. 13.5% of Paramount Group shares are owned by insiders. Comparatively, 0.2% of Annaly Capital Management shares are owned 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.

Volatility and Risk

Paramount Group has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500. Comparatively, Annaly Capital Management has a beta of 1.54, indicating that its stock price is 54% more volatile than the S&P 500.

Dividends

Paramount Group pays an annual dividend of $0.14 per share and has a dividend yield of 3.0%. Annaly Capital Management pays an annual dividend of $2.60 per share and has a dividend yield of 13.8%. Paramount Group pays out -11.7% of its earnings in the form of a dividend. Annaly Capital Management pays out -268.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Annaly Capital Management is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Annaly Capital Management beats Paramount Group on 12 of the 16 factors compared between the two stocks.

About Paramount Group

Paramount Group, Inc. ("Paramount" or the "Company") is a fully-integrated real estate investment trust that owns, operates, manages, acquires and redevelops high-quality, Class A office properties located in select central business district submarkets of New York and San Francisco. Paramount is focused on maximizing the value of its portfolio by leveraging the sought-after locations of its assets and its proven property management capabilities to attract and retain high-quality tenants.

About Annaly Capital Management

Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.