Analyzing Granite Point Mortgage Trust (NYSE:GPMT) & Ellington Financial (NYSE:EFC)

Granite Point Mortgage Trust (NYSE:GPMT) and Ellington Financial (NYSE:EFC) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, profitability, analyst recommendations, earnings and valuation.

Valuation and Earnings

This table compares Granite Point Mortgage Trust and Ellington Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Granite Point Mortgage Trust	$185.55 million	0.78	-$207.05 million	($2.12)	-1.45
Ellington Financial	$136.41 million	9.64	$145.86 million	$1.24	10.61

Ellington Financial has lower revenue, but higher earnings than Granite Point Mortgage Trust. Granite Point Mortgage Trust is trading at a lower price-to-earnings ratio than Ellington Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Granite Point Mortgage Trust	-59.38%	-26.91%	-7.96%
Ellington Financial	89.52%	13.56%	1.07%

Institutional and Insider Ownership

51.6% of Granite Point Mortgage Trust shares are owned by institutional investors. Comparatively, 55.6% of Ellington Financial shares are owned by institutional investors. 3.1% of Granite Point Mortgage Trust shares are owned by insiders. Comparatively, 4.1% of Ellington Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

Granite Point Mortgage Trust has a beta of 1.83, suggesting that its share price is 83% more volatile than the S&P 500. Comparatively, Ellington Financial has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Granite Point Mortgage Trust	0	2	1	0	2.33
Ellington Financial	0	1	5	1	3.00

Granite Point Mortgage Trust currently has a consensus price target of $3.13, indicating a potential upside of 1.79%. Ellington Financial has a consensus price target of $14.46, indicating a potential upside of 9.87%. Given Ellington Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Ellington Financial is more favorable than Granite Point Mortgage Trust.

Dividends

Granite Point Mortgage Trust pays an annual dividend of $0.20 per share and has a dividend yield of 6.5%. Ellington Financial pays an annual dividend of $1.56 per share and has a dividend yield of 11.9%. Granite Point Mortgage Trust pays out -9.4% of its earnings in the form of a dividend. Ellington Financial pays out 125.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Ellington Financial beats Granite Point Mortgage Trust on 14 of the 17 factors compared between the two stocks.

About Granite Point Mortgage Trust

Granite Point Mortgage Trust Inc., a real estate investment trust, originates, invests in, and manages senior floating-rate commercial mortgage loans, and other debt and debt-like commercial real estate investments in the United States. The company provides intermediate-term bridge or transitional financing for various purposes, including acquisitions, recapitalizations, and refinancing, as well as a range of business plans, including lease-up, renovation, repositioning, and repurposing of the commercial property. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2015 and is headquartered in New York, New York.

About Ellington Financial

Ellington Financial Inc., through its subsidiary, Ellington Financial Operating Partnership LLC, acquires and manages mortgage-related, consumer-related, corporate-related, and other financial assets in the United States. The company acquires and manages residential mortgage-backed securities (RMBS) backed by prime jumbo, Alt-A, manufactured housing, and subprime mortgage; 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; and commercial mortgage loans and other commercial real estate debt. It also provides collateralized loan obligations; mortgage-related and non-mortgage-related derivatives; corporate debt and equity securities; corporate loans; and other strategic investments; and consumer loans and asset-backed securities backed by consumer and commercial assets. The company qualifies as a real estate investment trust (REIT) for federal income tax purposes. As a REIT, it intends to distribute at least 90% of its taxable income as dividends to shareholders. Ellington Financial LLC was incorporated in 2007 and is headquartered in Old Greenwich, Connecticut.