Critical Review: Ellington Financial (EFC) and BankUnited (BKU)
Ellington Financial (NYSE: EFC) and BankUnited (NYSE:BKU) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitabiliy, risk, valuation, earnings, institutional ownership and dividends.
This is a breakdown of current ratings and price targets for Ellington Financial and BankUnited, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Ellington Financial currently has a consensus target price of $19.17, suggesting a potential upside of 15.88%. BankUnited has a consensus target price of $39.40, suggesting a potential upside of 21.23%. Given BankUnited’s higher possible upside, analysts clearly believe BankUnited is more favorable than Ellington Financial.
Risk and Volatility
Ellington Financial has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500. Comparatively, BankUnited has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500.
Ellington Financial pays an annual dividend of $1.80 per share and has a dividend yield of 10.9%. BankUnited pays an annual dividend of $0.84 per share and has a dividend yield of 2.6%. Ellington Financial pays out 260.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BankUnited pays out 39.1% of its earnings in the form of a dividend.
Institutional and Insider Ownership
50.8% of Ellington Financial shares are owned by institutional investors. Comparatively, 99.4% of BankUnited shares are owned by institutional investors. 10.6% of Ellington Financial shares are owned by insiders. Comparatively, 5.1% of BankUnited shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Valuation & Earnings
This table compares Ellington Financial and BankUnited’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Ellington Financial||$68.32 million||7.77||$22.16 million||$0.69||23.97|
|BankUnited||$946.20 million||3.67||$229.68 million||$2.15||15.12|
BankUnited has higher revenue and earnings than Ellington Financial. BankUnited is trading at a lower price-to-earnings ratio than Ellington Financial, indicating that it is currently the more affordable of the two stocks.
This table compares Ellington Financial and BankUnited’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
BankUnited beats Ellington Financial on 9 of the 16 factors compared between the two stocks.
Ellington Financial Company Profile
Ellington Financial LLC is a specialty finance company that acquires and manages mortgage-related and other financial assets. The Company’s targeted assets include residential mortgage-backed securities (RMBS), backed by loans for which the principal and interest payments are not guaranteed by a United States Government agency or a United States Government-sponsored entity, collectively referred to as non-Agency RMBS; RMBS for which the principal and interest payments are guaranteed by the United States government agency or the United States government-sponsored entity (Agency RMBS); consumer loans and asset-backed securities (ABS) backed by consumer loans; commercial mortgage-backed securities (CMBS) commercial mortgage loans and other commercial real estate debt; residential mortgage loans; collateralized loan obligations (CLOs); corporate debt and equity, including distressed debt and equity, and mortgage-related derivatives.
BankUnited Company Profile
BankUnited, Inc. is the bank holding company of BankUnited (the Bank). The bank is a national banking association. As of December 31, 2016, the Bank provided a range of banking services to individual and corporate customers through 94 banking centers located in 15 Florida counties and six banking centers in the New York metropolitan area. The Bank also provides a range of traditional banking products and services to both its commercial and retail customers. The Company offers a range of lending products, including small business loans, commercial real estate loans, equipment loans and leases, term loans, formula-based loans, municipal and non-profit loans and leases, commercial and mortgage warehouse lines of credit, letters of credit and consumer loans. It offers traditional deposit products, including checking accounts, money market deposit accounts, savings accounts and certificates of deposit with a range of terms and rates.
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