Ellington Financial (NYSE:EFC) and Armada Hoffler Properties (NYSE:AHH) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.
Ellington Financial pays an annual dividend of $1.64 per share and has a dividend yield of 10.7%. Armada Hoffler Properties pays an annual dividend of $0.80 per share and has a dividend yield of 5.3%. Ellington Financial pays out 151.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Armada Hoffler Properties pays out 80.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Armada Hoffler Properties has increased its dividend for 4 consecutive years.
This is a breakdown of current recommendations for Ellington Financial and Armada Hoffler Properties, as provided by MarketBeat.
Ellington Financial presently has a consensus price target of $17.90, suggesting a potential upside of 16.61%. Armada Hoffler Properties has a consensus price target of $16.31, suggesting a potential upside of 8.46%. Given Ellington Financial’s stronger consensus rating and higher possible upside, research analysts plainly believe Ellington Financial is more favorable than Armada Hoffler Properties.
Institutional and Insider Ownership
46.3% of Ellington Financial shares are owned by institutional investors. Comparatively, 81.8% of Armada Hoffler Properties shares are owned by institutional investors. 11.1% of Ellington Financial shares are owned by company insiders. Comparatively, 14.4% of Armada Hoffler Properties shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Valuation & Earnings
This table compares Ellington Financial and Armada Hoffler Properties’ gross revenue, earnings per share (EPS) and valuation.
Ellington Financial has higher earnings, but lower revenue than Armada Hoffler Properties. Ellington Financial is trading at a lower price-to-earnings ratio than Armada Hoffler Properties, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Ellington Financial has a beta of 0.4, meaning that its share price is 60% less volatile than the S&P 500. Comparatively, Armada Hoffler Properties has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500.
This table compares Ellington Financial and Armada Hoffler Properties’ net margins, return on equity and return on assets.
Ellington Financial Company Profile
Ellington Financial LLC, through its subsidiary Ellington Financial Operating Partnership LLC, operates as a specialty finance company in the United States. The company acquires and manages mortgage-related assets, including residential mortgage-backed securities (RMBS) backed by prime jumbo, Alt-A, manufactured housing, and subprime residential mortgage loans; RMBS for which the principal and interest payments are guaranteed by the U.S. government agency or the U.S. government-sponsored entity; residential mortgage loans; commercial mortgage-backed securities; commercial mortgage loans and other commercial real estate debt; and residential mortgage loans. It also provides collateralized loan obligations; mortgage-related and non-mortgage-related derivatives; equity investments in mortgage-related entities; and other strategic investments, as well as invests in corporate debt and equity securities. In addition, it offers consumer loans and asset-backed securities backed by consumer and commercial assets. Ellington Financial LLC was founded in 2007 and is based in Old Greenwich, Connecticut.
Armada Hoffler Properties Company Profile
Armada Hoffler Properties, Inc. (NYSE: AHH) is a vertically-integrated, self-managed real estate investment trust ("REIT") with nearly four decades of experience developing, building, acquiring and managing high-quality, institutional-grade office, retail and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. The Company also provides general construction and development services to third-party clients, in addition to developing and building properties to be placed in its stabilized portfolio. The Company has elected to be taxed as a REIT for U.S. federal income tax purposes.