Pennymac Vs American Capital Case

My analysis is about the companies in the real estate industry which is under the SIC code 6798. The first company is PennyMac Mortgage Investment Trust, and its competitor, American Capital Mortgage Investment Corp. Both of them are incorporated in Maryland and are a part of the REIT (Real Estate Investment Trust) industries. These two companies have the same objective, which is to give attracted related risk returns to investors over the long term. For instance, PennyMac invests on residential mortgage assets and mortgage related assets in order to maximize the value of mortgage loans. They also traded their common stock on the New York Stock Exchange. On the other hand, American Capital’s does not only invest in residential mortgage backed

These ratio shows that PennyMac gains more profit than American Capital’s. American Capital net profit margin is -41.94 which indicates a loss in profit. PennyMac is much more efficient in creating profit than American Capital. The industry net profit ratio is 9.85%. This shows that the industry does not generate as much profit as PennyMac and does not have a loss in profit like American Capital. PennyMac is much better in managing operations than American Capital. The asset turnover ratio for PennyMac is 0.0902 and the asset turnover ratio for American is 0.0065. Both of the companies ratios are low therefore shows that both companies are not efficiently using their assets to generate revenue. Although that is the case, it also shows that PennyMac can use their assets much more efficiently in generating revenue than American

PennyMac can also generate more profits and income than American Capital. One of PennyMac weakness, compared to American Mortgage, is that it has more debts and risk than American Mortgage.
I would invest in PennyMac Investment Trust instead of American Capital Mortgage capital because they have a higher net profit margin. PennyMac price to earnings ratio is 11.19 while American Capital price to earnings ratio is -34.01. Comparing these two ratios, I would rather invest in PennyMac instead of American Capital. Even though, PennyMac price to earnings ratio is lower than the industry’s price to earnings ratio, 80.00, it is better than having a negative price to earnings ratio. With a negative price per earnings ratio, it shows that the American Capital is a company that is