Contrasting Ellington Residential Mortgage REIT (EARN) and Granite Point Mortgage Trust (GPMT)

Ellington Residential Mortgage REIT (NYSE: EARN) and Granite Point Mortgage Trust (NYSE:GPMT) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, dividends, risk, institutional ownership, valuation, profitability and analyst recommendations.

Valuation and Earnings

This table compares Ellington Residential Mortgage REIT and Granite Point Mortgage Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ellington Residential Mortgage REIT $30.14 million 4.95 $10.79 million $0.91 12.29
Granite Point Mortgage Trust N/A N/A N/A N/A N/A

Ellington Residential Mortgage REIT has higher revenue and earnings than Granite Point Mortgage Trust.

Insider and Institutional Ownership

65.9% of Ellington Residential Mortgage REIT shares are owned by institutional investors. Comparatively, 42.2% of Granite Point Mortgage Trust shares are owned by institutional investors. 2.7% of Ellington Residential Mortgage REIT shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Ellington Residential Mortgage REIT and Granite Point Mortgage Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ellington Residential Mortgage REIT 0 1 0 0 2.00
Granite Point Mortgage Trust 0 1 4 0 2.80

Ellington Residential Mortgage REIT presently has a consensus target price of $14.00, suggesting a potential upside of 25.22%. Granite Point Mortgage Trust has a consensus target price of $19.50, suggesting a potential upside of 12.52%. Given Ellington Residential Mortgage REIT’s higher probable upside, research analysts plainly believe Ellington Residential Mortgage REIT is more favorable than Granite Point Mortgage Trust.

Dividends

Ellington Residential Mortgage REIT pays an annual dividend of $1.48 per share and has a dividend yield of 13.2%. Granite Point Mortgage Trust pays an annual dividend of $0.70 per share and has a dividend yield of 4.0%. Ellington Residential Mortgage REIT pays out 162.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Ellington Residential Mortgage REIT and Granite Point Mortgage Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ellington Residential Mortgage REIT 35.79% 12.07% 1.17%
Granite Point Mortgage Trust N/A N/A N/A

Summary

Ellington Residential Mortgage REIT beats Granite Point Mortgage Trust on 8 of the 11 factors compared between the two stocks.

About Ellington Residential Mortgage REIT

Ellington Residential Mortgage REIT is a real estate investment trust. The Company conducts its business through its subsidiaries, EARN OP GP LLC and Ellington Residential Mortgage LP (the Operating Partnership). It specializes in acquiring, investing in and managing residential mortgage- and real estate-related assets. It constructs and managing a portfolio consisting of residential mortgage-backed securities (RMBS) for which the principal and interest payments are guaranteed by the United States Government agency or the United States Government-sponsored entity (Agency RMBS) and, to a lesser extent, RMBS backed by prime jumbo, Alternative A-paper manufactured housing, and subprime residential mortgage loans (non-Agency RMBS). Its Agency RMBS include residential mortgage pass-through certificates, collateralized mortgage obligations (CMOs) and to-be-announced mortgage pass-through certificates (TBAs). Its non-agency RMBS include investment grade and non-investment grade classes.

About Granite Point Mortgage Trust

Granite Point Mortgage Trust Inc. is focused primarily on directly originating, investing in and managing senior floating-rate commercial mortgage loans and other debt, such as commercial real estate investments. The Company formed to continue and expand the commercial real estate lending business. The Company is a long-term, fundamental value-oriented investor. The Company constructs its own investment portfolio on a loan-by-loan basis, emphasizing rigorous credit underwriting, selectivity and diversification available in the market. The Company provides intermediate-term bridge or transitional financing for a variety of purposes, including acquisitions, recapitalizations, refinancing and a range of business plans including lease-up, renovation, repositioning and repurposing of the property. It generally targets the top 25-50, metropolitan statistical areas (MSA) in the United States.

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