Ellington Financial (NYSE:EFC – Get Free Report) and Adamas Trust (NASDAQ:ADAM – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.
Insider and Institutional Ownership
55.6% of Ellington Financial shares are held by institutional investors. Comparatively, 54.9% of Adamas Trust shares are held by institutional investors. 3.2% of Ellington Financial shares are held by company insiders. Comparatively, 2.0% of Adamas Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Ellington Financial and Adamas Trust”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Ellington Financial | $189.96 million | 7.78 | $146.87 million | $1.64 | 6.99 |
| Adamas Trust | $601.95 million | 1.12 | $149.05 million | $1.68 | 4.45 |
Adamas Trust has higher revenue and earnings than Ellington Financial. Adamas 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 Ellington Financial and Adamas Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ellington Financial | 52.43% | 16.61% | 1.38% |
| Adamas Trust | 29.82% | 14.72% | 1.04% |
Analyst Ratings
This is a breakdown of recent ratings and target prices for Ellington Financial and Adamas Trust, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ellington Financial | 0 | 4 | 1 | 0 | 2.20 |
| Adamas Trust | 0 | 5 | 1 | 0 | 2.17 |
Ellington Financial presently has a consensus price target of $14.25, indicating a potential upside of 24.29%. Adamas Trust has a consensus price target of $9.50, indicating a potential upside of 27.09%. Given Adamas Trust’s higher probable upside, analysts plainly believe Adamas Trust is more favorable than Ellington Financial.
Volatility and Risk
Ellington Financial has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500. Comparatively, Adamas Trust has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500.
Dividends
Ellington Financial pays an annual dividend of $1.56 per share and has a dividend yield of 13.6%. Adamas Trust pays an annual dividend of $1.20 per share and has a dividend yield of 16.1%. 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. Adamas Trust pays out 71.4% of its earnings in the form of a dividend. Adamas Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
Ellington Financial beats Adamas Trust on 8 of the 15 factors compared between the two stocks.
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.
About Adamas Trust
New York Mortgage Trust, Inc. acquires, invests in, finances, and manages mortgage-related single-family and multi-family residential assets in the United States. Its targeted investments include residential loans, second mortgages, and business purpose loans; structured multi-family property investments, such as preferred equity in, and mezzanine loans to owners of multi-family properties, as well as joint venture equity investments in multi-family properties; non-agency residential mortgage-backed securities (RMBS); agency RMBS; commercial mortgage-backed securities (CMBS); and other mortgage, residential housing, and credit-related assets. 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 incorporated in 2003 and is headquartered in New York, New York.
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