Ellington Financial (NYSE: EFC) and Berkshire Hills Bancorp (NYSE:BHLB) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, earnings and analyst recommendations.

Dividends

Ellington Financial pays an annual dividend of $1.80 per share and has a dividend yield of 11.4%. Berkshire Hills Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.2%. 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. Berkshire Hills Bancorp pays out 46.2% of its earnings in the form of a dividend. Ellington Financial has raised its dividend for 2 consecutive years. Ellington Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Ellington Financial and Berkshire Hills Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ellington Financial $69.62 million 7.26 $22.48 million $0.70 22.50
Berkshire Hills Bancorp $336.88 million 4.54 $72.74 million $1.82 21.04

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

Profitability

This table compares Ellington Financial and Berkshire Hills Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ellington Financial 26.67% 5.48% 1.32%
Berkshire Hills Bancorp 15.03% 6.93% 0.85%

Institutional & Insider Ownership

50.5% of Ellington Financial shares are owned by institutional investors. Comparatively, 74.1% of Berkshire Hills Bancorp shares are owned by institutional investors. 10.6% of Ellington Financial shares are owned by company insiders. Comparatively, 2.8% of Berkshire Hills Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Ellington Financial has a beta of 0.43, indicating that its stock price is 57% less volatile than the S&P 500. Comparatively, Berkshire Hills Bancorp has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Ellington Financial and Berkshire Hills Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ellington Financial 0 0 2 0 3.00
Berkshire Hills Bancorp 0 2 3 0 2.60

Ellington Financial presently has a consensus target price of $18.75, suggesting a potential upside of 19.05%. Berkshire Hills Bancorp has a consensus target price of $37.70, suggesting a potential downside of 1.57%. Given Ellington Financial’s stronger consensus rating and higher possible upside, research analysts plainly believe Ellington Financial is more favorable than Berkshire Hills Bancorp.

Summary

Berkshire Hills Bancorp beats Ellington Financial on 9 of the 17 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 Berkshire Hills Bancorp

Berkshire Hills Bancorp, Inc. (Berkshire) is a holding company for Berkshire Bank (the Bank) and Berkshire Insurance Group. Berkshire offers a range of deposit, lending, insurance and wealth management products to retail, commercial, not-for-profit and municipal customers in its market areas. Berkshire product offerings also include retail and commercial electronic banking, commercial cash management and commercial interest rate swaps. The Bank’s loan portfolio consists of commercial loans, which include residential mortgages, commercial real estate, commercial and industrial loans, and consumer loans. The Bank’s securities available for sale include municipal bonds and obligations, mortgage-backed securities, other bonds and obligations, and marketable equity securities. As of December 5, 2016, the Bank had 99 full service branch offices in Massachusetts, New York, Connecticut, Vermont, New Jersey and Pennsylvania.

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