Ellington Residential Mortgage (EARN) AI Stock Analysis

• Market Cap: $205.07M
• Dividend Yield: 17.58%
• Average Volume (3M): 974.29K
• Price to Earnings (P/E): 19.5
• Beta (1Y): 1.10
• Revenue Growth: 440.31%
• EPS Growth: 21.03%
• Country: US
• Employees: 150
• Sector: Real Estate
• Sector Strength: 83
• Industry: REIT - Mortgage
• EPS (TTM): 0.30
• Shares Outstanding: 37,559,196
• 10 Day Avg. Volume: 494,181
• 30 Day Avg. Volume: 974,287
• PEG Ratio: 0.93
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 3.52
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: -11.10K
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $5.88
• Price Target Upside: 7.69% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Ellington Residential Mortgage's overall score reflects its mixed financial performance, with inconsistent revenue and cash flow but a stable balance sheet. Technical analysis indicates a currently weak stock trend, though valuation offers a high dividend yield. The absence of debt and strategic moves like the closed-end fund conversion are positive, but market volatility remains a risk.

Ellington Residential Mortgage Business Overview & Revenue Model

Company Description

Ellington Residential Mortgage REIT (EARN) is a real estate investment trust focused on the residential mortgage market. The company primarily invests in and manages residential mortgage-backed securities (RMBS), with an emphasis on those backed by government-sponsored enterprises such as Fannie Mae and Freddie Mac. EARN leverages its expertise in asset selection and risk management to deliver attractive risk-adjusted returns to its shareholders.

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

Ellington Residential Mortgage Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 5.46
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 5.46 is above the 20-day moving average (MA) of 5.08, below the 50-day MA of 5.59, and below the 200-day MA of 6.07, indicating a neutral trend. The MACD of <0.01 indicates Negative momentum. The RSI at 54.04 is Neutral, neither overbought nor oversold. The STOCH value of 70.10 is Neutral, 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
MITT	68 Neutral	$172.02M	4.70	10.40%	11.79%	50.41%	-21.02%
SEVN	66 Neutral	$177.83M	10.38	6.27%	11.81%	-11.97%	-27.40%
Sector *	60 Neutral	$2.73B	11.44	0.07%	8661.49%	5.94%	-15.68%
AOMR	58 Neutral	$222.08M	8.06	11.61%	13.36%	73.21%	-13.73%
NREF	53 Neutral	$252.30M	14.07	8.58%	13.67%	11.78%	65.73%
EARN	52 Neutral	$205.07M	19.55	3.99%	17.58%	440.31%	21.03%
ACRE	48 Neutral	$195.29M	―	-6.00%	22.11%	-52.08%	10.36%

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.