Ellington Financial (NYSE: EFC) and People’s United Financial (NASDAQ:PBCT) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, analyst recommendations, risk, earnings and profitabiliy.

Valuation and Earnings

This table compares Ellington Financial and People’s United Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ellington Financial $68.32 million 7.57 $22.48 million $0.70 23.00
People’s United Financial $1.34 billion 4.43 $300.38 million $0.89 19.76

People’s United Financial has higher revenue and earnings than Ellington Financial. People’s United Financial is trading at a lower price-to-earnings ratio than Ellington Financial, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Ellington Financial has a beta of 0.44, suggesting that its share price is 56% less volatile than the S&P 500. Comparatively, People’s United Financial has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.

Insider & Institutional Ownership

51.0% of Ellington Financial shares are held by institutional investors. Comparatively, 76.1% of People’s United Financial shares are held by institutional investors. 10.6% of Ellington Financial shares are held by insiders. Comparatively, 2.7% of People’s United Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Ellington Financial and People’s United Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ellington Financial 26.67% 5.44% 1.34%
People’s United Financial 18.88% 6.14% 0.75%

Analyst Recommendations

This is a summary of recent ratings and price targets for Ellington Financial and People’s United Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ellington Financial 0 0 3 0 3.00
People’s United Financial 2 8 0 0 1.80

Ellington Financial presently has a consensus price target of $19.17, indicating a potential upside of 19.05%. People’s United Financial has a consensus price target of $18.03, indicating a potential upside of 2.51%. Given Ellington Financial’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Ellington Financial is more favorable than People’s United Financial.

Dividends

Ellington Financial pays an annual dividend of $1.80 per share and has a dividend yield of 11.2%. People’s United Financial pays an annual dividend of $0.69 per share and has a dividend yield of 3.9%. Ellington Financial pays out 257.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. People’s United Financial pays out 77.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ellington Financial has raised its dividend for 10 consecutive years. Ellington Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Ellington Financial beats People’s United Financial on 9 of the 17 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.

People’s United Financial Company Profile

People’s United Financial, Inc. is a bank holding company and a financial holding company of People’s United Bank (the Bank). The Bank is engaged in providing commercial banking, retail banking and wealth management services to individual, corporate and municipal customers. The Company operates through two segments: Commercial Banking and Retail Banking. Commercial Banking segment is engaged in commercial real estate lending, commercial and industrial lending, and commercial deposit gathering activities. It offers cash management, correspondent banking, municipal banking, institutional trust services, corporate trust, insurance services and private banking, among others. Retail Banking segment provides consumer lending (including residential mortgage and home equity lending) and consumer deposit gathering activities. The Retail Banking segment also includes brokerage, financial advisory services, investment management services, and life insurance and non-institutional trust services.

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