It is Poised to be a Bull Market for Two Harbors Investment Corp. (TWO)

Two Harbors Investment Corp. (NYSE: TWO) stock fell -2.50% on Friday to $4.68 against a previous-day closing price of $4.80. With 2.2 million shares changed hands, the volume of the stock remained lighter than its average volume of 2.75 million shares. During the session, the REIT – Mortgage company that operates in wider Real Estate sector, reached to the highest price of $4.8400 whereas the lowest price it dropped to was $4.6800. The 52-week range on TWO shows that it touched its highest point at $6.81 and its lowest point at $4.26 during that stretch. It currently has a 1-year price target of $5.21. With its current market cap of 1.61 billion, TWO has annualized dividend of $0.68 while the current yield stands at 14.53%. Beta for the stock currently stands at 1.59.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of TWO was down-trending over the past week, with a drop of -4.68%, but this was down by -4.10% over a month. Three-month performance dropped to -0.43% while six-month performance fell -13.01%. The stock lost -27.67% in the past year, while it has lost -18.89% so far this year. A look at the trailing 12-month EPS for TWO yields 0.61 with Next year EPS estimates of 0.75. For the next quarter, that number is 0.21. This implies an EPS growth rate of 106.90% for this year and -6.81% for next year. EPS is expected to grow by 3.33% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of -25.10%.

Float and Shares Shorts:

At present, 344.28 million TWO shares are outstanding with a float of 341.95 million shares on hand for trading. On Jul 14, 2022, short shares totaled 11.34 million, which was 3.30% higher than short shares on Jun 14, 2022. In addition to Mr. William Ross Greenberg as the firm’s Pres, CEO, Chief Investment Officer & Director, Ms. Mary Kathryn Riskey serves as its VP & CFO.

Institutional Ownership:

Through their ownership of 68.49% of TWO’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 48.00% of TWO, in contrast to 16.85% held by mutual funds. Shares owned by individuals account for 1.26%. As the largest shareholder in TWO with 16.34% of the stake, BlackRock Fund Advisors holds 56,284,572 shares worth 56,284,572. A second-largest stockholder of TWO, The Vanguard Group, Inc., holds 37,415,164 shares, controlling over 10.86% of the firm’s shares. Allspring Global Investments LLC is the third largest shareholder in TWO, holding 15,521,937 shares or 4.51% stake. With a 7.41% stake in TWO, the iShares Core S&P Small Cap ETF is the largest stakeholder. A total of 25,517,271 shares are owned by the mutual fund manager. The Allspring Special Small Cap Value, which owns about 3.62% of TWO stock, is the second-largest Mutual Fund holder. It holds 12,483,096 shares valued at 60.54 million. Vanguard Total Stock Market Index holds 3.00% of the stake in TWO, owning 10,327,035 shares worth 50.09 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for TWO since 9 analysts follow the stock currently. There are 2 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 7 believe that the stock is worth HOLDING, 0 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With TWO analysts setting a high price target of $5.50 and a low target of $5.00, the average target price over the next 12 months is $5.21. Based on these targets, TWO could surge 17.52% to reach the target high and rise by 6.84% to reach the target low. Reaching the average price target will result in a growth of 11.32% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. TWO will report FY 2022 earnings on 02/08/2023. Analysts have provided yearly estimates in a range of $0.92 being high and $0.74 being low. For TWO, this leads to a yearly average estimate of $0.82. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Two Harbors Investment Corp. surprised analysts by $0.04 when it reported $0.22 EPS against a consensus estimate of $0.18. The surprise factor in the prior quarter was -$0.02. Based on analyst estimates, the high estimate for the next quarter is $0.26 and the low estimate is $0.19. The average estimate for the next quarter is thus $0.22.

Summary of Insider Activity:

Insiders traded TWO stock several times over the past three months with 1 Buys and 0 Sells. In these transactions, 207,693 shares were bought while 0 shares were sold. The number of buy transactions has increased to 10 while that of sell transactions has risen to 8 over the past year. The total number of shares bought during that period was 664,447 while 128,361 shares were sold.

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