Ellington Financial LLC
) 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
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
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.
ELLINGTON FINL (EFC): Free Stock Analysis
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