Rithm Capital (NYSE:RITM) and Ellington Financial (NYSE:EFC) Financial Survey

Rithm Capital (NYSE:RITM) and Ellington Financial (NYSE:EFC) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, dividends, earnings and valuation.

Insider and Institutional Ownership

44.9% of Rithm Capital shares are owned by institutional investors. Comparatively, 55.6% of Ellington Financial shares are owned by institutional investors. 0.6% of Rithm Capital shares are owned by company insiders. Comparatively, 3.2% of Ellington Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Rithm Capital has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500. Comparatively, Ellington Financial has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Rithm Capital and Ellington Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rithm Capital	1	0	10	0	2.82
Ellington Financial	0	4	1	0	2.20

Rithm Capital presently has a consensus price target of $13.05, suggesting a potential upside of 49.93%. Ellington Financial has a consensus price target of $14.25, suggesting a potential upside of 19.77%. Given Rithm Capital’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Rithm Capital is more favorable than Ellington Financial.

Profitability

This table compares Rithm Capital and Ellington Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rithm Capital	9.20%	19.86%	2.84%
Ellington Financial	52.43%	16.61%	1.38%

Dividends

Rithm Capital pays an annual dividend of $1.00 per share and has a dividend yield of 11.5%. Ellington Financial pays an annual dividend of $1.56 per share and has a dividend yield of 13.1%. Rithm Capital pays out 166.7% 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 95.1% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Rithm Capital and Ellington Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rithm Capital	$3.32 billion	1.47	$681.45 million	$0.60	14.51
Ellington Financial	$390.76 million	3.92	$146.87 million	$1.64	7.25

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

Summary

Rithm Capital beats Ellington Financial on 9 of the 16 factors compared between the two stocks.

About Rithm Capital

Rithm Capital Corp. operates as an asset manager focused on real estate, credit, and financial services. It operates through Origination and Servicing, Investment Portfolio, Mortgage Loans Receivable, and Asset Management segments. Its investment portfolio primarily comprises of mortgage servicing rights (MSR), and MSR financing receivables, title, appraisal and property preservation, excess MSRs, and services advance investments; real estate securities, call rights, SFR properties, and residential mortgage loans; consumer and business purpose loans; and asset management related investments. 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 formerly known as New Residential Investment Corp. and changed its name to Rithm Capital Corp. in August 2022. Rithm Capital Corp. was incorporated in 2011 and is based 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.