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Ellington Residential Mortgage (EARN)
NYSE:EARN
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Ellington Residential Mortgage
(NYSE:EARN)
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Rating:60Neutral
Price Target:
$6.00
▲(12.57% Upside)
Ellington Residential Mortgage's overall stock score is driven by strong earnings call insights and a high dividend yield, indicating potential for income and growth. However, inconsistent financial performance and neutral technical indicators temper the outlook. The company's strategic initiatives and reduced leverage are positive, but cash flow management remains a concern.
Ellington Residential Mortgage (EARN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$200.41M
Dividend Yield18.01%
Average Volume (3M)312.75K
Price to Earnings (P/E)14.2
Beta (1Y)1.02
Revenue Growth271.03%
EPS Growth31.81%
CountryUS
Employees150
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)0.18
Shares Outstanding37,559,196
10 Day Avg. Volume310,740
30 Day Avg. Volume312,746
Financial Highlights & Ratios
PEG Ratio-1.21
Price to Book (P/B)0.93
Price to Sales (P/S)11.93
P/FCF Ratio19.73
Enterprise Value/Market Cap1.64
Enterprise Value/Revenue7.24
Enterprise Value/Gross Profit16.41
Enterprise Value/Ebitda7.72
Forecast
1Y Price Target
$5.88Price Target Upside10.32% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Ellington Residential Mortgage Business Overview & Revenue Model
Company DescriptionEllington 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 MoneyEllington Residential Mortgage generates revenue primarily through the interest income earned from its portfolio of residential mortgage-backed securities and other mortgage-related assets. The company's revenue model is based on the spread between the income generated by its assets and the cost of financing those assets, which often involves leveraging its investments through repurchase agreements and other forms of debt. Key revenue streams include interest income, gains from the sale of mortgage securities, and management fees. Additionally, strategic partnerships with financial institutions and investment firms may enhance EARN's access to capital and investment opportunities, further contributing to its earnings.
Ellington Residential Mortgage Earnings Call Summary
Earnings Call Date:Aug 19, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Positive
Ellington Credit Company reported strong financial performance with significant NAV growth and a well-executed expansion of the CLO portfolio. However, challenges such as European CLO underperformance and market volatility due to tariff announcements indicate a mixed environment. Despite these challenges, the company's active trading strategy and future plans for debt issuance suggest continued growth potential.Q2-2025 Updates
Positive Updates
Strong Economic Return and NAV Growth
Ellington Credit Company generated an annualized economic return of nearly 20% net and grew NAV per share. This was driven by excellent performance across CLO equity and mezzanine investments, as well as the timely redeployment of capital following the April sale of legacy mortgage-related holdings.
CLO Portfolio Expansion
The CLO portfolio grew by 27% quarter-over-quarter to $317 million. New purchases amounted to $91 million, primarily in CLO debt. The company successfully completed the disposition of remaining mortgage-related investments with minimal NAV impact.
Projected Coverage of Monthly Distribution
At the current rate of deployment, the company projects that starting in September, the monthly net investment income will cover the $0.08 monthly distribution, indicating a close to fully invested position.
Active Trading and Opportunistic Gains
The company benefited from active trading during market volatility, leading to significant net realized and unrealized gains on U.S. debt and equity. This included the redemption at par of mezzanine positions bought at discounts and a beneficial reset of a CLO equity position.
Plans for Long-term Debt Issuance
Ellington Credit Company plans to issue long-term unsecured debt later this year, which is expected to be accretive to both GAAP earnings and net investment income, further expanding the CLO portfolio.
Negative Updates
European CLO Equity Underperformance
European CLO equity underperformed U.S. equity during the quarter, reflecting more muted loan market gains and increased dispersion. Wider credit dispersion weighed on returns, especially in junior tranches.
Challenges in New Issue CLO Market
The new issue CLO market faced challenges due to AAA spreads not fully retracing while underlying loan spreads have. This has put pressure on new issue CLO equity arbitrage, leading to a focus on secondary market opportunities.
Impact of Tariff Announcements
The announcement of tariffs in April led to market volatility and corporate credit spreads widening. Although markets stabilized after a tariff pause, the initial impact contributed to a nonlinear path to profitability in the quarter.
Company Guidance
During the call, Ellington Credit Company provided guidance for the fiscal quarter ended June 30, 2025, highlighting a strong annualized economic return of nearly 20% net, with growth in net asset value (NAV) per share. The company's CLO portfolio expanded by 27% to $317 million, driven by strategic redeployment of capital and strong performance in CLO equity and mezzanine investments. The weighted-average GAAP yield on their CLO portfolio was reported at 15.6%, with adjusted net investment income recorded at $0.18 per share. The company aims to fully cover its monthly distribution of $0.08 starting in September, and plans to increase its CLO portfolio to approximately $400 million. Ellington also highlighted the potential issuance of long-term unsecured debt to enhance earnings growth. As of June 30, the NAV was $6.12 per share, with cash and cash equivalents totaling $36.6 million, and a NAV-based total return of 19.7% annualized.Ellington Residential Mortgage Financial Statement Overview
Summary
Ellington Residential Mortgage shows mixed financial performance. While operational efficiency improved and leverage reduced, revenue and cash flow trends remain inconsistent, highlighting underlying volatility. The balance sheet reflects improved stability with zero debt in 2024, but cash flow management needs improvement.Income Statement
Ellington Residential Mortgage experiences inconsistent revenue trends, with a notable negative revenue in 2023 but a strong recovery in 2024. The gross profit margin remains steady at 100% in 2024 due to the nature of revenue and cost structure. However, net profit margins have fluctuated significantly, reflecting operational volatility. EBIT margins improved in 2024, highlighting operational efficiency gains, but overall profitability remains inconsistent.48
Neutral
Balance Sheet
The company's balance sheet shows a positive equity position, with stockholders' equity increasing over the years. The absence of total debt in 2024 improves the debt-to-equity ratio, enhancing financial stability. However, the equity ratio indicates moderate leverage, suggesting some risk if asset values fluctuate. Overall, the balance sheet reflects a moderate risk profile with a positive trend towards reducing leverage.60
Neutral
Cash Flow
Ellington Residential Mortgage has shown erratic cash flow trends, with operating cash flow fluctuating and negative free cash flow in 2023 and 2024. The financing cash flow indicates significant outflows, raising concerns about sustainability. The absence of consistent positive free cash flow suggests challenges in generating sufficient cash from operations. The cash flow management needs improvement to ensure long-term financial health.42
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 45.38M | 70.28M | -65.00K | 20.19M | 29.15M | 26.23M |
| Gross Profit | 20.02M | 15.07M | -65.00K | 18.75M | 27.25M | 23.88M |
| EBITDA | 42.55M | 42.55M | 49.81M | 17.93M | 23.39M | 30.08M |
| Net Income | -5.25M | 6.59M | 4.56M | -30.20M | -6.31M | 20.11M |
Balance Sheet | ||||||
| Total Assets | 783.56M | 824.09M | 945.69M | 1.05B | 1.60B | 1.19B |
| Cash, Cash Equivalents and Short-Term Investments | 17.38M | 31.84M | 38.53M | 34.82M | 69.03M | 58.17M |
| Total Debt | 518.50M | 562.97M | 729.54M | 842.46M | 1.06B | 1.02B |
| Total Liabilities | 555.06M | 630.37M | 809.45M | 941.22M | 1.44B | 1.03B |
| Stockholders Equity | 228.50M | 193.73M | 136.24M | 112.41M | 154.22M | 166.40M |
Cash Flow | ||||||
| Free Cash Flow | 19.53M | 9.11M | -10.02M | 22.42M | 27.88M | 24.37M |
| Operating Cash Flow | 19.53M | 9.11M | -10.02M | 22.42M | 27.88M | 24.37M |
| Investing Cash Flow | 48.66M | 116.45M | 85.72M | 110.55M | -15.23M | 304.06M |
| Financing Cash Flow | -73.25M | -132.25M | -71.98M | -167.18M | -1.79M | -305.61M |
Ellington Residential Mortgage Technical Analysis
Neutral
5.33
Price Trends
5.46
Negative
5.50
Negative
5.44
Negative
Market Momentum
-0.06
Negative
51.14
Neutral
87.74
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EARN, the sentiment is Neutral. The current price of 5.33 is above the 20-day moving average (MA) of 5.24, below the 50-day MA of 5.46, and below the 200-day MA of 5.44, indicating a neutral trend. The MACD of -0.06 indicates Negative momentum. The RSI at 51.14 is Neutral, neither overbought nor oversold. The STOCH value of 87.74 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for EARN.
Ellington Residential Mortgage Risk Analysis
Ellington Residential Mortgage disclosed 108 risk factors in its most recent earnings report. Ellington Residential Mortgage reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ellington Residential Mortgage Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
64 Neutral | $344.12M | 8.40 | 10.88% | 13.21% | 65.75% | 14.28% | |
60 Neutral | $200.41M | 14.23 | 6.89% | 18.01% | 271.03% | 31.81% | |
59 Neutral | $228.64M | 5.50 | 11.78% | 19.93% | 377.90% | ― | |
48 Neutral | $423.77M | 30.14 | 2.89% | 14.79% | -35.46% | -67.15% | |
45 Neutral | $211.17M | 4.55 | 29.40% | 2.83% | 168.31% | ― |
* Financial Sector Average
EARN
Ellington Residential Mortgage
5.33
-0.47
-8.10%
SSSS
SuRo Capital
8.84
4.41
99.55%
PNNT
Pennantpark Investment
6.49
0.37
6.05%
SCM
Stellus Capital
12.11
-0.67
-5.24%
TPVG
TriplePoint Venture Growth
5.67
-0.13
-2.24%
NXDT
NexPoint Diversified Real Estate Trust
3.59
-1.14
-24.10%
Ellington Residential Mortgage Corporate Events
Dividends
Ellington Residential Announces September 2025 Dividend
Positive
Sep 8, 2025
On September 8, 2025, Ellington Credit Company announced a monthly dividend of $0.08 per share, payable on October 31, 2025, to shareholders of record as of September 30, 2025. This decision reflects the company’s ongoing commitment to providing returns to its investors and may influence its market positioning by demonstrating financial stability and shareholder value.
The most recent analyst rating on (EARN) stock is a Hold with a $6.00 price target. To see the full list of analyst forecasts on Ellington Residential Mortgage stock, see the EARN Stock Forecast page.
Financial Disclosures
Ellington Residential Mortgage Reports Strong Q1 2025 Results
Positive
Aug 19, 2025
Ellington Credit Company, a registered closed-end fund, reported its financial results for the first fiscal quarter ending June 30, 2025, showing a net asset value per share of $6.12, a GAAP net income of $10.2 million, and a significant growth in its CLO portfolio to $316.9 million. The company achieved a robust annualized return of 19.7% during this period, driven by strong performance across CLO equity and mezzanine debt, and strategic capital deployment following the sale of its remaining mortgage portfolio. Despite a lag in net investment income due to capital rotation, the company anticipates an increase in NII in the coming months, which is expected to cover monthly distributions starting in September.
The most recent analyst rating on (EARN) stock is a Hold with a $6.00 price target. To see the full list of analyst forecasts on Ellington Residential Mortgage stock, see the EARN Stock Forecast page.
Business Operations and StrategyDividends
Ellington Residential Mortgage Declares Monthly Dividend
Positive
Aug 7, 2025
On August 7, 2025, Ellington Credit Company announced that its Board of Trustees declared a monthly dividend of $0.08 per share, which will be payable on September 30, 2025, to shareholders of record as of August 29, 2025. This announcement reflects the company’s ongoing commitment to providing returns to its investors and may influence its market positioning by highlighting its financial stability and strategic focus on delivering consistent dividends.
The most recent analyst rating on (EARN) stock is a Buy with a $6.50 price target. To see the full list of analyst forecasts on Ellington Residential Mortgage stock, see the EARN Stock Forecast page.
Dividends
Ellington Residential Mortgage Declares Monthly Dividend
Positive
Jul 8, 2025
On July 8, 2025, Ellington Credit Company announced that its Board of Trustees declared a monthly dividend of $0.08 per share, which will be payable on August 29, 2025, to common shareholders of record as of July 31, 2025. This announcement reflects the company’s ongoing commitment to providing returns to its shareholders and may impact its financial operations and market positioning, considering the various risks and uncertainties outlined in their forward-looking statements.
The most recent analyst rating on (EARN) stock is a Buy with a $6.50 price target. To see the full list of analyst forecasts on Ellington Residential Mortgage stock, see the EARN Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.