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Ellington Financial Inc

Ellington Financial Inc

EFC
$12.89USD↓-1.15%-0.15 today

MARKET CAP

1.7B

P/E (TTM)

9.7x

FWD P/E

—

DAY RANGE

$13 – $13

52W RANGE

$11
$14

AI Summary

Stalk
StalkMedium

EFC remains in a Stage 2 advance with a bullish Momentum Breakout and structural uptrend. The medium-term bias is Bullish, supported by Stage 2 classification and the Momentum Breakout pattern, while short-term price action below flat-to-declining EMAs indicates timing is unfavorable for immediate entry. Pullbacks into the rising EMAs and support zones warrant a stalking posture. Key risk is failure to hold EMA support leading to a Stage 3 transition if price breaks lower.

  • ↑Q2 ADE of $0.60 covers $0.39 dividend payout, signaling strong cash flow
  • ↑38% YoY growth in Longbridge originations (~$590 M), driving earnings momentum
  • ↓Leverage exceeds 9x debt-to-equity, heightening funding and rate-shock risks
Full analysis →

The case for & against

Bull & Bear analysis

Bearish

Ellington Financial Inc. (NYSE: EFC) operates within the financial services sector, specializing in mortgage and structured credit investments. The company is notable for its robust platform, leveraging sound research, proprietary data analytics, and diversified sourcing to enhance profitability while managing risks related to credit and interest rates. Ellington's strategic partnerships with loan originators, particularly in the reverse mortgage segment through Longbridge, position it as a strong player in the market, aiming to capitalize on the growing trend of mortgage securitization and credit management.

Bull says

  • ↑Q2 ADE of $0.60 covers $0.39 dividend payout, signaling strong cash flow
  • ↑38% YoY growth in Longbridge originations (~$590 M), driving earnings momentum
  • ↑Proprietary portal generates $15 M+ loan purchases daily, yielding 13.6% economic return
  • ↑2.95% dividend yield backed by robust distributable earnings and stable margins
  • ↑Strong profitability, growth and book-to-price factors; low volatility appeals to risk-averse investors

Bear says

  • ↓Leverage exceeds 9x debt-to-equity, heightening funding and rate-shock risks
  • ↓Rising interest rates may erode origination profitability per CFO guidance
  • ↓Adjusted earnings yield under 1% signals weak return generation capacity
  • ↓High short interest and low institutional ownership reflect market skepticism
  • ↓Smaller size and intensifying mortgage competition may limit growth prospects

Investment themes with EFC

Mortgage REITs↓ -0.79%

NLY · AGNC · STWD

Earnings Call · Q3 2023 · Mgmt. Guidance

Updated 12-22-2024neutral

Transcript signals

Bull points

  • For the third quarter, we reported net income of $0.10 per share on a fully mark to mark basis and adjusted distributable earnings of $0.33 per share. These results compare to net income of $0.04 per share and ADE of $0.38 per share for the prior quarter.
  • The credit strategy generated $0.37 per share of net income driven by an increase in net interest income sequentially and significant net gains on interest rate hedges.
  • I'm confident and really excited about the potential for EFC to thrive in this weaker economic backdrop. Our current loans and securities are overwhelmingly low LTV and collateralized by real estate that has lots of built up equity. We've done a fantastic job avoiding the land mines in the CMBS. We have a lot of experience in using credit hedges to mitigate downside risk. Now we see the potential to play offense in the distress cycle for commercial real estate.

Bear points

  • we do expect that delinquencies on our non-QM loans will temporarily increase in Q4, but we also expect that they will revert to more normalized levels in the coming months once all the transfer related issues have been resolved.
  • the significant headwinds of elevated market volatility and rising long term interest rates.
  • We see potential headwinds for that sector with student loan repayments restarted, persistent inflation for necessities like food and rent and potentially slowing wage growth. Our consumer loan portfolio underperformed during the quarter, but we have been shrinking that portfolio and don't have a lot of capital deployed in that sector.
Read full transcript analysis ›