Ellington Residential Mortgage (EARN) AI Stock Analysis

• Market Cap: $212.59M
• Dividend Yield: 16.96%
• Average Volume (3M): 378.98K
• Price to Earnings (P/E): 15.1
• Beta (1Y): 1.01
• Revenue Growth: 271.03%
• EPS Growth: 31.81%
• Country: US
• Employees: 150
• Sector: Financial
• Sector Strength: 73
• Industry: Asset Management
• EPS (TTM): 0.18
• Shares Outstanding: 37,559,196
• 10 Day Avg. Volume: 324,059
• 30 Day Avg. Volume: 378,981
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.55
• Enterprise Value/Revenue: 9.02
• Enterprise Value/Gross Profit: 5.68
• Enterprise Value/Ebitda: 7.72
• 1Y Price Target: $6.13
• Price Target Upside: 8.30% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 60 Neutral
• Price Target: $6.00 ▲(6.01% Upside)

Ellington Residential Mortgage's overall stock score reflects a balance of strengths and challenges. The earnings call indicates strong growth potential and strategic expansion, which are significant positives. However, financial performance is mixed, with volatility in revenue and cash flow. Technical indicators suggest a neutral outlook, while the valuation is favorable due to a high dividend yield. These factors combined result in a moderate overall score.

Positive Factors

CLO Portfolio Expansion

The significant expansion of the CLO portfolio indicates strategic growth and diversification, enhancing long-term revenue potential and market competitiveness.

Zero Debt in 2024

Having zero debt enhances financial stability and reduces risk, providing flexibility for future investments and growth opportunities.

Strong Economic Return

A robust economic return underscores effective asset management and strategic investment, supporting sustainable long-term growth and shareholder value.

Negative Factors

Inconsistent Revenue Trends

Volatile revenue trends can undermine financial predictability and planning, posing challenges to maintaining stable operations and investor confidence.

Erratic Cash Flow Trends

Erratic cash flow trends indicate potential liquidity issues, affecting the company's ability to fund operations and invest in growth initiatives sustainably.

European CLO Underperformance

Underperformance in European CLOs reflects regional market challenges, potentially impacting overall portfolio returns and strategic objectives.

Ellington Residential Mortgage Business Overview & Revenue Model

Company Description

Ellington Residential Mortgage (EARN) is a real estate investment trust (REIT) that primarily focuses on acquiring and managing residential mortgage-backed securities (RMBS) and other mortgage-related assets. The company operates in the financial services sector, leveraging its expertise in the mortgage market to generate returns for its investors. EARN aims to provide attractive risk-adjusted returns through effective asset management and strategic investment in a diverse portfolio of residential mortgage assets, including both agency and non-agency securities.

How the Company Makes Money

Ellington 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 Financial Statement Overview

Summary

Ellington Residential Mortgage shows mixed financial performance with inconsistent revenue and cash flow trends, despite improvements in operational efficiency and reduced leverage. The balance sheet is stable with zero debt in 2024, but cash flow management remains a concern.

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.

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.

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	36.44M	15.07M	-65.00K	20.19M	-557.00K	25.94M
Gross Profit	57.89M	15.07M	-65.00K	18.75M	-1.87M	24.64M
EBITDA	42.55M	42.55M	49.81M	17.93M	23.39M	14.82M
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	2.84M	1.53M
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

• Technical Analysis Sentiment: Positive
• Last Price: 5.66
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EARN, the sentiment is Positive. The current price of 5.66 is below the 20-day moving average (MA) of 5.67, below the 50-day MA of 5.69, and above the 200-day MA of 5.59, indicating a neutral trend. The MACD of <0.01 indicates Positive momentum. The RSI at 49.20 is Neutral, neither overbought nor oversold. The STOCH value of 27.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for EARN.

Ellington Residential Mortgage Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	68 Neutral	$17.85B	11.54	9.95%	3.76%	9.70%	1.08%
MITT	67 Neutral	$244.66M	8.93	8.66%	10.25%	22.45%	-44.01%
SEVN	66 Neutral	$164.23M	10.55	5.71%	12.29%	-16.74%	-32.89%
AOMR	63 Neutral	$231.71M	6.30	14.91%	13.13%	75.08%	-21.03%
NREF	61 Neutral	$268.49M	6.17	21.74%	13.20%	25.17%	―
EARN	60 Neutral	$212.59M	15.11	6.89%	16.96%	271.03%	31.81%
ACRE	48 Neutral	$266.78M	―	-3.30%	16.49%	-27.60%	62.75%

Ellington Residential Mortgage Corporate Events

Ellington Residential Announces September 2025 Dividend

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.

Ellington Residential Mortgage Reports Strong Q1 2025 Results

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.

Ellington Residential Mortgage Declares Monthly Dividend

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.

Ellington Residential Mortgage Declares Monthly Dividend

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.

Ellington Residential Mortgage Declares June 2025 Dividend

On June 9, 2025, Ellington Credit Company announced that its Board of Trustees declared a monthly dividend of $0.08 per share, which will be payable on July 31, 2025, to shareholders of record as of June 30, 2025. This announcement reflects the company’s ongoing commitment to providing returns to its investors, potentially impacting its market positioning and stakeholder interests positively.