Comparing Ellington Residential Mortgage REIT (EARN) & MFA Financial (MFA)
Ellington Residential Mortgage REIT (NYSE: EARN) and MFA Financial (NYSE:MFA) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.
This table compares Ellington Residential Mortgage REIT and MFA Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ellington Residential Mortgage REIT||40.44%||12.02%||1.17%|
Ellington Residential Mortgage REIT has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500. Comparatively, MFA Financial has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.
Earnings & Valuation
This table compares Ellington Residential Mortgage REIT and MFA Financial’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Ellington Residential Mortgage REIT||$24.22 million||6.37||$11.90 million||$1.07||10.80|
|MFA Financial||$566.49 million||5.47||$312.66 million||$0.73||10.70|
MFA Financial has higher revenue and earnings than Ellington Residential Mortgage REIT. MFA Financial is trading at a lower price-to-earnings ratio than Ellington Residential Mortgage REIT, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
66.7% of Ellington Residential Mortgage REIT shares are owned by institutional investors. Comparatively, 80.6% of MFA Financial shares are owned by institutional investors. 2.7% of Ellington Residential Mortgage REIT shares are owned by company insiders. Comparatively, 0.9% of MFA Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Ellington Residential Mortgage REIT pays an annual dividend of $1.48 per share and has a dividend yield of 12.8%. MFA Financial pays an annual dividend of $0.80 per share and has a dividend yield of 10.2%. Ellington Residential Mortgage REIT pays out 138.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MFA Financial pays out 109.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This is a breakdown of recent ratings and target prices for Ellington Residential Mortgage REIT and MFA Financial, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ellington Residential Mortgage REIT||0||2||0||0||2.00|
Ellington Residential Mortgage REIT currently has a consensus target price of $14.00, indicating a potential upside of 21.11%. MFA Financial has a consensus target price of $8.75, indicating a potential upside of 12.04%. Given Ellington Residential Mortgage REIT’s higher probable upside, analysts clearly believe Ellington Residential Mortgage REIT is more favorable than MFA Financial.
MFA Financial beats Ellington Residential Mortgage REIT on 9 of the 16 factors compared between the two stocks.
About Ellington Residential Mortgage REIT
Ellington Residential Mortgage REIT is a real estate investment trust. The Company conducts its business through its subsidiaries, EARN OP GP LLC and Ellington Residential Mortgage LP (the Operating Partnership). It specializes in acquiring, investing in and managing residential mortgage- and real estate-related assets. It constructs and managing a portfolio consisting of residential mortgage-backed securities (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) and, to a lesser extent, RMBS backed by prime jumbo, Alternative A-paper manufactured housing, and subprime residential mortgage loans (non-Agency RMBS). Its Agency RMBS include residential mortgage pass-through certificates, collateralized mortgage obligations (CMOs) and to-be-announced mortgage pass-through certificates (TBAs). Its non-agency RMBS include investment grade and non-investment grade classes.
About MFA Financial
MFA Financial, Inc. is engaged in the real estate finance business. The Company’s subsidiaries invest in residential mortgage assets, including Non-Agency mortgage-backed securities (MBS), Agency MBS, residential whole loans and credit risk transfer (CRT) securities. The Company’s Non-Agency MBS portfolio primarily consists of Legacy Non-Agency MBS and 3 Year Step-up securities. In addition to Non-Agency MBS investments, the Company invests in re-performing and non-performing residential whole loans through its interests in certain consolidated trusts. The mortgages collateralizing its Agency MBS portfolio are predominantly Hybrids, 15-year fixed-rate mortgages and adjustable-rate mortgages (ARMs).
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