Critical Investigation: Altisource Asset Management (NYSE: AAMC) vs. Ellington Financial (NYSE: EFC)

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Altisource Asset Management (NYSE:AAMC – Get Rating) and Ellington Financial (NYSE:EFC – Get Rating) are both small cap financial companies, but which is the better stock? We will compare the two companies based on institutional ownership strength, analyst recommendations, valuation, profitability, earnings, dividends and risk.

Volatility and risk

Altisource Asset Management has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500. In comparison, Ellington Financial has a beta of 1.89, indicating that its stock price is stock is 89% more volatile than the S&P 500.

Benefits and evaluation

This table compares the gross revenue, earnings per share and valuation of Altisource Asset Management and Ellington Financial.

Gross revenue Price/sales ratio Net revenue Earnings per share Price/earnings ratio
Altisource Asset Management $15.76 million 1.39 -$6.00 million $2.34 4.53
Ellington Financial $131.48 million 7.16 $135.25 million $1.60 9.80

Ellington Financial has higher revenues and profits than Altisource Asset Management. Altisource Asset Management trades 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 the net margins, return on equity and return on assets of Altisource Asset Management and Ellington Financial.

Net margins Return on equity return on assets
Altisource Asset Management N / A -0.73% 0.64%
Ellington Financial 63.71% 9.86% 2.01%

Insider and Institutional Ownership

15.9% of Altisource Asset Management shares are held by institutional investors. By comparison, 59.2% of Ellington Financial’s shares are held by institutional investors. 1.5% of Altisource Asset Management shares are held by insiders. By comparison, 6.4% of Ellington Financial shares are held by insiders. Strong institutional ownership indicates that large fund managers, hedge funds, and endowments believe a company will outperform the market over the long term.

Analyst Notes

This is a breakdown of recent recommendations and price targets for Altisource Asset Management and Ellington Financial, as reported by MarketBeat.

Sales Ratings Hold odds Buy reviews Strong buy odds Rating
Altisource Asset Management 0 0 0 0 N / A
Ellington Financial 0 2 2 0 2.50

Ellington Financial has a consensus target price of $19.00, indicating a potential upside of 21.17%. Given Ellington Financial’s possible higher upside, analysts clearly believe that Ellington Financial is more favorable than Altisource Asset Management.

Summary

Ellington Financial beats Altisource Asset Management on 12 out of 13 factors compared between the two stocks.

About Altisource Asset Management (Get a rating)

Altisource Asset Management Corp. operates as an alternative loan company. The company provides liquidity and capital to underserved markets. It assesses opportunities that could be of long-term benefit to shareholders such as Crypto-ATMs. The company was founded on March 15, 2012 and is headquartered in Christiansted, Virgin Islands.

About Ellington Financial (Get a rating)

Ellington financial logoEllington Financial Inc., through its subsidiary, Ellington Financial Operating Partnership LLC, acquires and manages mortgage, consumer, corporate and other financial assets in the United States. The company acquires and manages residential mortgage-backed securities (RMBS) backed by jumbo, Alt-A, pre-engineered and subprime residential mortgages; RMBS whose payment of principal and interest is guaranteed by the US government agency or US government-sponsored entity; residential mortgage loans; commercial mortgage-backed securities; and commercial mortgages and other commercial real estate debt. It also provides secured loan bonds; mortgage and non-mortgage derivatives; corporate debt and equity securities; business loans; and other strategic investments. In addition, the Company offers consumer loans and asset-backed securities backed by consumer and commercial assets. Ellington Financial LLC was incorporated in 2007 and is based in Old Greenwich, Connecticut.



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