Ellington Financial (NYSE: EFC) and Meta Financial Group (NASDAQ:CASH) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, profitabiliy, dividends, earnings, institutional ownership and risk.

Earnings and Valuation

This table compares Ellington Financial and Meta Financial Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ellington Financial $68.32 million 7.53 $22.48 million $0.70 22.89
Meta Financial Group $238.92 million 2.86 $49.55 million $5.30 13.79

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

Institutional & Insider Ownership

51.1% of Ellington Financial shares are owned by institutional investors. Comparatively, 74.1% of Meta Financial Group shares are owned by institutional investors. 10.6% of Ellington Financial shares are owned by insiders. Comparatively, 6.1% of Meta Financial Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for Ellington Financial and Meta Financial Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ellington Financial 0 0 3 0 3.00
Meta Financial Group 0 1 1 0 2.50

Ellington Financial presently has a consensus target price of $19.17, indicating a potential upside of 19.64%. Meta Financial Group has a consensus target price of $108.00, indicating a potential upside of 47.74%. Given Meta Financial Group’s higher probable upside, analysts plainly believe Meta Financial Group is more favorable than Ellington Financial.

Profitability

This table compares Ellington Financial and Meta Financial Group’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%
Meta Financial Group 18.74% 17.23% 1.58%

Dividends

Ellington Financial pays an annual dividend of $1.80 per share and has a dividend yield of 11.2%. Meta Financial Group pays an annual dividend of $0.52 per share and has a dividend yield of 0.7%. 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. Meta Financial Group pays out 9.8% of its earnings in the form of a dividend.

Risk and Volatility

Ellington Financial has a beta of 0.44, suggesting that its stock price is 56% less volatile than the S&P 500. Comparatively, Meta Financial Group has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500.

Summary

Meta Financial Group beats Ellington Financial on 9 of the 16 factors compared between the two stocks.

About Ellington Financial

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.

About Meta Financial Group

Meta Financial Group, Inc. is a unitary savings and loan holding company. The Company operates through its banking subsidiary, MetaBank (the Bank). Its segments include Payments, Banking, and Corporate Services/Other. MetaBank is both a community-oriented financial institution offering a range of financial services to meet the needs of the communities it serves and a payments company providing services on a nationwide basis. It operates in both the banking and payments industries through MetaBank, its retail banking operation; Meta Payment Systems (MPS), its electronic payments division; AFS/IBEX Financial Services Inc. (AFS/IBEX), its insurance premium financing division, and Refund Advantage, EPS Financial, LLC (EPS) Financial and Specialty Consumer Services, its tax-related financial solutions divisions.

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