On Monday, September 24th, CYS Investments Inc. (CYS) will be going ex-dividend at the close of trading. With that said I wanted to examine CYS a bit closer and compare the company's profit and operating margins to some of the other names within the REIT sector. In the last 12 months CYS has demonstrated a profit margin of 169.79% and an operating margin of 86.74%, which in my opinion are both very strong and solid numbers.
Overview: CYS Investments, Inc.
As per the company's website, "CYS is a specialty finance company that was created with the objective of achieving consistent risk-adjusted investment income. We seek to achieve this objective by investing on a leveraged basis in residential mortgage pass-through securities for which the principal and interest payments are guaranteed by the Federal National Mortgage Association, or Fannie Mae, the Federal Home Loan Mortgage Corporation, or Freddie Mac, or the Government National Mortgage Association, or Ginnie Mae, and collateralized by single-family residential mortgage loans. We refer to these securities as Agency RMBS."
The Profit Margin Comparisons of CYS Investments, Inc.
As a whole, and in my opinion, the REIT sector has one of the most diverse ranges of profit margins when compared to some of the other industries I've written articles on. For example, there are a total of five REIT companies CYS Investments, Inc. actually outpaces quite substantially. The first of these companies is New York Mortgage Trust (NYMT) which has demonstrated a profit margin of 41.51% over the last 12 months. Comparatively speaking CYS outpaces NYMT by a ratio of 4.09 to 1.
The next four companies CYS Investments clearly outpaces are Hatteras Financial (HTS), Chimera Investment Corp. (CIM), Annaly Capital Management (NLY), and American Capital Agency Corp. (AGNC). In the last 12 months HTS has demonstrated a profit margin of 103.46%, CIM has demonstrated a profit margin of 90.42%, AGNC has demonstrated a profit margin of 87.94%, and NLY has demonstrated a profit margin of 50.98%. Comparatively speaking CYS actually outpaces HTS by a ratio of 1.64 to 1, CIM by a ratio of 1.87 to 1, AGNC by a ratio of 1.93 to 1, and NLY by a ratio of 3.33 to 1.
The Operating Margin Comparisons of CYS Investments, Inc.
As was the case with profit margins, and in my opinion, the REIT sector also has some of the most diverse operating margins I've seen since I've started writing. For example, CYS Investments, Inc. actually outpaces the previously mentioned two companies quite substantially. The two companies are clearly New York Mortgage Trust and Annaly Capital Management. In the last 12 months CYS has demonstrated a positive operating margin of 86.74%, whereas NYMT has demonstrated a positive profit margin of 55.43% and NLY has demonstrated a positive profit margin of 60.25%. Comparatively speaking CYS outpaces NYMT by a ratio of 1.56 to 1 and NLY by a ratio of 1.43 to 1.
Should potential investors jump at the chance to establish a position in CYS Investments, especially since the stock is going ex-dividend at the close of trading, today? From a comparative standpoint with regard to the company's margins relative to some of the biggest names in the REIT sector, I think the numbers present a solid opportunity and I'd keep an eye out for continued developments, especially with regard to any post-QE3 comments by the Federal Reserve with regard to the sustainability of interest rates at current levels.