Ellington Residential Mortgage (EARN) AI Stock Analysis

• Market Cap: $178.78M
• Dividend Yield: 20.96%
• Average Volume (3M): 1.11M
• Price to Earnings (P/E): 17.0
• Beta (1Y): 1.21
• Revenue Growth: 440.31%
• EPS Growth: 21.03%
• Country: US
• Employees: 150
• Sector: Real Estate
• Sector Strength: 70
• Industry: REIT - Mortgage
• EPS (TTM): 0.30
• Shares Outstanding: 37,559,196
• 10 Day Avg. Volume: 1,805,429
• 30 Day Avg. Volume: 1,110,838
• PEG Ratio: 0.81
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• Price to Cash Flow (P/CF): 12.70
• P/FCF Ratio: 4.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $6.50
• Price Target Upside: 35.70% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

Ellington Residential Mortgage's overall stock score reflects a mixed financial and operational landscape. The company shows improvement in operational efficiency and a stable balance sheet, yet faces challenges with inconsistent revenue and cash flow trends. Technical analysis indicates a bearish trend, while the high dividend yield offers a compensating factor despite a high P/E ratio. The strategic transition to a closed-end fund is promising, but potential market volatility remains a concern.

Ellington Residential Mortgage Business Overview & Revenue Model

Company Description

Ellington Residential Mortgage REIT, a real estate investment trust, specializes in acquiring, investing in, and managing residential mortgage-and real estate-related assets. It acquires and manages residential mortgage-backed securities (RMBS), including agency pools and agency collateralized mortgage obligations (CMOs); and non-agency RMBS comprising non-agency CMOs, such as investment grade and non-investment grade. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. Ellington Residential Mortgage REIT was incorporated in 2012 and is based in Old Greenwich, Connecticut.

How the Company Makes Money

Ellington Residential Mortgage REIT generates revenue primarily through interest income from its portfolio of residential mortgage-backed securities (RMBS). The company earns money from the interest payments made on the mortgages underlying the securities it owns. By investing in RMBS, EARN seeks to benefit from the spread between the income generated from its mortgage assets and the cost of financing those investments. The company also engages in hedging activities to manage interest rate risks and optimize its portfolio's performance. Significant factors contributing to its earnings include the performance of the housing market, interest rate fluctuations, and the company's ability to effectively manage its asset portfolio.

Ellington Residential Mortgage Financial Statement Overview

Summary

Ellington Residential Mortgage has shown improvements in revenue and debt management in the TTM period. While recent profitability and leverage metrics appear strong, historical volatility in revenue, profitability, and cash flow raises concerns. Continued focus on stabilizing revenue streams and maintaining current debt levels will be crucial for sustainable financial health.

Income Statement

Ellington Residential Mortgage's TTM revenue has improved significantly from the previous year, showing a positive turnaround. However, historical revenue volatility is a concern. The TTM gross profit and net income margins are strong but were preceded by negative margins in prior years, indicating unstable profitability. The lack of consistent revenue growth and fluctuating EBIT margins impact the overall income statement score.

Balance Sheet

The company's balance sheet is relatively stable with a significant reduction in total debt to zero in the TTM period, improving the debt-to-equity ratio. The equity ratio has also improved, indicating better asset financing through equity. However, historical leverage was high, which raises concerns about past financial stability. The current positive trend suggests a more stable financial position moving forward.

Cash Flow

The cash flow statement shows positive operating cash flow in the TTM period, reversing from negative cash flow previously. However, free cash flow remains low, limiting flexibility in reinvestment opportunities. Operating cash flow to net income ratio is a positive indicator, but past volatility in cash flows suggests future risks. Overall, cash flow management shows improvement but remains a concern.

Breakdown
TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement		Total Revenue
14.17M	-65.00K	20.19M	-557.00K	25.94M	27.54M
	Gross Profit
11.97M	-65.00K	18.75M	-1.87M	24.64M	26.24M
	EBIT
44.46M	-4.12M	-15.38M	-6.31M	20.11M	22.26M
	EBITDA
47.67M	49.81M	17.93M	23.39M	14.82M	0.00
	Net Income Common Stockholders
21.03M	4.56M	-30.20M	-6.31M	20.11M	22.26M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
50.11M	38.53M	34.82M	69.03M	58.17M	35.35M
	Total Assets
1.51B	945.69M	1.05B	1.60B	1.19B	1.49B
	Total Debt
1.31B	729.54M	842.46M	1.06B	1.02B	1.30B
	Net Debt
1.26B	-38.53M	807.64M	995.81M	957.08M	1.26B
	Total Liabilities
1.34B	809.45M	941.22M	2.84M	1.53M	3.76M
	Stockholders Equity
167.18M	136.24M	112.41M	154.22M	166.40M	160.84M
Cash Flow		Free Cash Flow
2.43M	-10.02M	22.42M	27.88M	24.37M	17.53M
	Operating Cash Flow
2.43M	-10.02M	22.42M	27.88M	24.37M	17.53M
	Investing Cash Flow
225.62M	85.72M	110.55M	-15.23M	304.06M	221.85M
	Financing Cash Flow
-242.30M	-71.98M	-167.18M	-1.79M	-305.61M	-222.62M

Ellington Residential Mortgage Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 4.79
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EARN, the sentiment is Negative. The current price of 4.79 is below the 20-day moving average (MA) of 5.34, below the 50-day MA of 5.91, and below the 200-day MA of 6.20, indicating a bearish trend. The MACD of -0.17 indicates Positive momentum. The RSI at 31.54 is Neutral, neither overbought nor oversold. The STOCH value of 13.04 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EARN.

Ellington Residential Mortgage Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NLY	68 Neutral	$11.25B	11.61	8.40%	15.32%	13.33%	―
TWO	62 Neutral	$1.19B	4.81	13.74%	16.79%	28.33%	―
Sector *	61 Neutral	$4.21B	15.62	-3.65%	12.27%	6.29%	-21.37%
AGNC	59 Neutral	$8.16B	9.58	9.58%	17.73%	384.69%	963700.00%
MFA	55 Neutral	$943.22M	11.25	6.35%	17.24%	26.34%	79.07%
EARN	51 Neutral	$178.78M	17.04	3.99%	20.96%	440.31%	21.03%
ARR	45 Neutral	$1.20B	8.01	-1.09%	20.35%	-46.65%	76.86%

Ellington Residential Mortgage Corporate Events

Ellington Residential Mortgage Completes Fund Conversion

On April 1, 2025, Ellington Credit Company announced the completion of its conversion to a Delaware-domiciled closed-end fund registered under the Investment Company Act of 1940. This conversion involves selling its remaining Agency MBS pools, acquiring additional corporate CLOs, and operating as a Regulated Investment Company under U.S. federal tax law. The company also plans to change its fiscal and tax year to end on March 31. The new agreements, including an Investment Advisory Agreement and an Administration Agreement, outline the management and administrative fees, which are based on the fund’s net asset value and performance. The conversion aims to enhance the company’s operational efficiency and market positioning.

Ellington Credit Reports Q4 2024 Financial Results

Ellington Credit Company, previously known as Ellington Residential Mortgage, reported its financial results for the fourth quarter of 2024, highlighting a net loss of $2.0 million and adjusted distributable earnings of $7.8 million. The company has been focusing on expanding its CLO portfolio, which grew by 18% to $171.1 million by year-end, and plans to convert into a Delaware registered closed-end fund by April 1, 2025, to enhance shareholder value and focus on corporate CLO investments.

Ellington Residential Mortgage Reports Q4 2024 Financial Results

Ellington Credit Company, operating in the financial sector, has disclosed its preliminary financial results for the fourth quarter of 2024, reporting a net income per common share in the range of $(0.08) to $(0.06) and adjusted distributable earnings per common share between $0.26 and $0.28. The company, which has seen an increase in its CLO and MBS portfolios, is in the process of converting to a Delaware registered closed-end fund with a focus on corporate CLO investments, expected to complete on or before April 1, 2025. This strategic move aims to position the company effectively within the industry and potentially impact future operations and stakeholder interests.