Reviewing Hamilton Lane (NASDAQ:HLNE) & Ellington Credit (NYSE:EARN)

Ellington Credit (NYSE:EARN) and Hamilton Lane (NASDAQ:HLNE) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, risk, dividends and institutional ownership.

Valuation & Earnings

This table compares Ellington Credit and Hamilton Lane”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ellington Credit	$15.88 million	10.18	-$38.85 million	($0.98)	-4.32
Hamilton Lane	$758.99 million	6.42	$249.18 million	$6.56	13.38

Hamilton Lane has higher revenue and earnings than Ellington Credit. Ellington Credit is trading at a lower price-to-earnings ratio than Hamilton Lane, indicating that it is currently the more affordable of the two stocks.

Dividends

Ellington Credit pays an annual dividend of $0.96 per share and has a dividend yield of 22.7%. Hamilton Lane pays an annual dividend of $2.40 per share and has a dividend yield of 2.7%. Ellington Credit pays out -98.0% of its earnings in the form of a dividend. Hamilton Lane pays out 36.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Hamilton Lane has increased its dividend for 8 consecutive years. Ellington Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Ellington Credit has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500. Comparatively, Hamilton Lane has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Institutional & Insider Ownership

20.4% of Ellington Credit shares are held by institutional investors. Comparatively, 97.4% of Hamilton Lane shares are held by institutional investors. 1.4% of Ellington Credit shares are held by company insiders. Comparatively, 24.0% of Hamilton Lane shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Ellington Credit and Hamilton Lane’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ellington Credit	-70.52%	N/A	N/A
Hamilton Lane	32.14%	25.10%	15.75%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Ellington Credit and Hamilton Lane, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ellington Credit	0	1	1	0	2.50
Hamilton Lane	0	2	6	1	2.89

Ellington Credit currently has a consensus target price of $5.50, indicating a potential upside of 29.90%. Hamilton Lane has a consensus target price of $131.57, indicating a potential upside of 49.96%. Given Hamilton Lane’s stronger consensus rating and higher probable upside, analysts clearly believe Hamilton Lane is more favorable than Ellington Credit.

Summary

Hamilton Lane beats Ellington Credit on 14 of the 18 factors compared between the two stocks.

About Ellington Credit

Ellington Credit Company, a real estate investment trust, acquires, invests in, and manages residential mortgage-and real estate-related assets. It acquires and manages residential mortgage-backed securities (RMBS), including agency pools and agency collateralized mortgage obligations (CMOs); and non-agency RMBS, such as non-agency CMOs, such as investment grade and non-investment grade. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. The company was formerly known as Ellington Residential Mortgage REIT and changed its name to Ellington Credit Company in April 2024. Ellington Credit Company was incorporated in 2012 and is based in Old Greenwich, Connecticut.

About Hamilton Lane

Hamilton Lane Incorporated is a private equity firm specializing in early venture, emerging growth, turnaround, middle market, mature, mid-venture, bridge, buyout, distressed/vulture, loan, mezzanine in growth capital companies. It prefers to invest in energy, industrials, consumer discretionary, health care, real estate, information technology, utilities, and consumer services. The firm prefers to invest in Africa/Middle East, Asia/Pacific, Europe, Latin America and Caribbean, United States of America, and Canada. The firm prefers to invest between $1 million and $100 million. It prefers to take majority stake. Hamilton Lane Incorporated was founded in 1991 and is based in Conshohocken, Pennsylvania with additional offices across Europe, North America, Asia Pacific and the Middle East.