Analyzing Empire State Realty Trust (NYSE:ESRT) & ARMOUR Residential REIT (NYSE:ARR)

ARMOUR Residential REIT (NYSE:ARR) and Empire State Realty Trust (NYSE:ESRT) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, dividends, risk, valuation, profitability and analyst recommendations.

Insider & Institutional Ownership

54.2% of ARMOUR Residential REIT shares are owned by institutional investors. Comparatively, 67.1% of Empire State Realty Trust shares are owned by institutional investors. 0.4% of ARMOUR Residential REIT shares are owned by company insiders. Comparatively, 14.0% of Empire State Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares ARMOUR Residential REIT and Empire State Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARMOUR Residential REIT	-2.61%	16.00%	1.65%
Empire State Realty Trust	6.45%	2.84%	1.14%

Risk & Volatility

ARMOUR Residential REIT has a beta of 1.53, meaning that its stock price is 53% more volatile than the S&P 500. Comparatively, Empire State Realty Trust has a beta of 1.39, meaning that its stock price is 39% more volatile than the S&P 500.

Dividends

ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 15.5%. Empire State Realty Trust pays an annual dividend of $0.14 per share and has a dividend yield of 1.7%. ARMOUR Residential REIT pays out -669.8% of its earnings in the form of a dividend. Empire State Realty Trust pays out 50.0% 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. ARMOUR Residential REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for ARMOUR Residential REIT and Empire State Realty Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARMOUR Residential REIT	0	4	0	0	2.00
Empire State Realty Trust	1	0	1	0	2.00

ARMOUR Residential REIT presently has a consensus target price of $20.50, suggesting a potential upside of 10.13%. Empire State Realty Trust has a consensus target price of $11.50, suggesting a potential upside of 39.34%. Given Empire State Realty Trust’s higher possible upside, analysts clearly believe Empire State Realty Trust is more favorable than ARMOUR Residential REIT.

Earnings and Valuation

This table compares ARMOUR Residential REIT and Empire State Realty Trust”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARMOUR Residential REIT	-$478,000.00	-3,912.42	-$14.39 million	($0.43)	-43.29
Empire State Realty Trust	$767.92 million	1.80	$53.24 million	$0.28	29.48

Empire State Realty Trust has higher revenue and earnings than ARMOUR Residential REIT. ARMOUR Residential REIT is trading at a lower price-to-earnings ratio than Empire State Realty Trust, indicating that it is currently the more affordable of the two stocks.

Summary

Empire State Realty Trust beats ARMOUR Residential REIT on 10 of the 15 factors compared between the two stocks.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. Its securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans; and unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.

About Empire State Realty Trust

Empire State Realty Trust, Inc. (NYSE: ESRT) is a NYC-focused REIT that owns and operates a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets. The company is the recognized leader in energy efficiency and indoor environmental quality. ESRT’s flagship Empire State Building – the “World’s Most Famous Building” – includes its Observatory, Tripadvisor’s 2023 Travelers’ Choice Awards: Best of the Best the #1 attraction in the US for two consecutive years. As of September 30, 2023, ESRT’s portfolio is comprised of approximately 8.6 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 727 residential units across three multifamily properties.