Ellington Financial (NYSE:EFC) vs. PennyMac Mortgage Investment Trust (NYSE:PMT) Head to Head Comparison

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

Institutional & Insider Ownership

67.4% of PennyMac Mortgage Investment Trust shares are held by institutional investors. Comparatively, 55.6% of Ellington Financial shares are held by institutional investors. 0.9% of PennyMac Mortgage Investment Trust shares are held by company insiders. Comparatively, 4.1% of Ellington Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

PennyMac Mortgage Investment Trust has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500. Comparatively, Ellington Financial has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500.

Dividends

PennyMac Mortgage Investment Trust pays an annual dividend of $1.60 per share and has a dividend yield of 13.2%. Ellington Financial pays an annual dividend of $1.56 per share and has a dividend yield of 12.5%. PennyMac Mortgage Investment Trust pays out 163.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ellington Financial pays out 116.4% 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 PennyMac Mortgage Investment Trust and Ellington Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PennyMac Mortgage Investment Trust	41.59%	9.53%	0.71%
Ellington Financial	89.04%	14.55%	1.15%

Analyst Recommendations

This is a summary of current recommendations and price targets for PennyMac Mortgage Investment Trust and Ellington Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PennyMac Mortgage Investment Trust	0	5	3	0	2.38
Ellington Financial	0	3	4	0	2.57

PennyMac Mortgage Investment Trust currently has a consensus price target of $13.75, indicating a potential upside of 13.31%. Ellington Financial has a consensus price target of $14.55, indicating a potential upside of 16.84%. Given Ellington Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Ellington Financial is more favorable than PennyMac Mortgage Investment Trust.

Valuation & Earnings

This table compares PennyMac Mortgage Investment Trust and Ellington Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PennyMac Mortgage Investment Trust	$307.46 million	3.43	$127.87 million	$0.98	12.38
Ellington Financial	$136.41 million	10.58	$145.86 million	$1.34	9.29

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

Summary

Ellington Financial beats PennyMac Mortgage Investment Trust on 11 of the 16 factors compared between the two stocks.

About PennyMac Mortgage Investment Trust

PennyMac Mortgage Investment Trust, through its subsidiary, primarily invests in mortgage-related assets in the United States. The company operates through: Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production segments. Its Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, subordinate mortgage-backed securities (MBS), distressed loans, and real estate. The company's Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency MBS, as well as related interest rate hedging activities. Its Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. The company primarily sells its loans to government-sponsored entities or PennyMac Loan Services, LLC. 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 shareholders. The company was incorporated in 2009 and is headquartered in Westlake Village, California.

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.