Back to top

Momentum

Zacks Equity Research

Ellington Financial LLC

EFC

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Shares of Ellington Financial LLC (EFC - Snapshot Report) have been trending higher and have gained almost 23% since the beginning of the year. This mortgage investment company, which became a Zacks #1 Rank (Strong Buy) on May 12, is near its 52-week high.

On May 7, Ellington Financial reported first quarter 2012 net income of $32.1 million, compared with the last year’s income of $11.1 million. Net investment income of 65 cents per share was up 3% from 63 cents recorded in the prior-year quarter. However, it missed the Zacks Consensus Estimate of 68 cents, representing a negative surprise of 4.4%.

A considerable decline in operating expenses was partially offset by a marginal drop in interest income. Overall, Ellington ended the quarter with a high level of liquidity.

Net investment income was $11.0 million, up 3.4% from the year-ago quarter on the back of a 9.1% decline in total expenses, which was attributable to the absence of incentive fees in the reported quarter. Interest income inched down 0.7% to $15.7 million as higher interest income from non-Agency MBS and commercial mortgage was more than offset by a decline in Agency MBS interest income.

Zacks Consensus Estimate Rises

Currently, the Zacks Consensus Estimate for 2012 is $4.09 per share, an expected year-over-year growth of about 55%. For 2013, the Zacks Consensus Estimate is pegged at $2.98 per share.

There is currently only one estimate for each year, but it has been revised upward in the past 30 days. As a result, the Zacks Consensus Estimates have moved higher by 46% for 2012 and 4% for 2013.

Valuation Looks Attractive

Ellington currently trades at a forward P/E of 5.19x, a 12% discount to the peer group average of 5.91x. Also, on a price-to-book basis, shares currently trade at 0.88x, a 4% discount to the peer group average of 0.92x.

Furthermore, Ellington has a trailing 12-month return on equity (ROE) of 11.8%, which is substantially above the peer group average of 1.3%. This implies that the company reinvests its earnings more efficiently than its peer group.

Chart Shows Strength

Ellington Financial has been generating strong momentum since May 4, with the expectation of stable first-quarter earnings. Moreover, the company has continuously outperformed its 50-day and 200-day moving averages over the last three months.

Currently, Ellington is trading just 5% below its 52-week high. The year-to-date return for the stock is 23.5% compared with the S&P 500’s return of 3.0%.

About the Company

Old Greenwich-based Ellington Financial LLC specializes in acquiring and managing MBS that include residential mortgage-backed securities, Alternative A-paper, mortgage-related derivatives, commercial mortgage backed securities and commercial mortgage loans. Incorporated in 2007, the company started trading on NYSE from October 2010. With a market capital of about $348.9 million, Ellington competes with Ocwen Financial Corp. (OCN) and PHH Corporation (PHH).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
GENERAL FINA GFN 8.20 +5.67%
QIHOO 360 TE QIHU 91.57 +4.38%
VIPSHOP HOLD VIPS 140.01 +3.49%
INVESTMENT T ITG 19.16 +3.34%
VERTEX ENERG VTNR 7.38 +3.07%