B.Riley raises Ellington stock target to $15 on strong earnings

On Friday, B.Riley analyst Matt Howlett increased the price target for Ellington Financial Inc. (NYSE:EFC) to $15.00, up from the previous $14.00, while maintaining a Buy rating on the stock. The adjustment follows Ellington’s reported adjusted earnings per share (EPS) of $0.45, surpassing both the consensus estimate of $0.38 and B.Riley’s own forecast of $0.36. According to InvestingPro data, the stock is currently trading at $14.09, near its 52-week high, with an impressive year-to-date return of 10.88%.

Ellington’s financial performance exceeded expectations with net interest income reaching $44.8 million, significantly higher than B.Riley’s projection of $33.2 million. This strong revenue figure was instrumental in covering the company’s dividend, buoyed by robust results from its reverse mortgage business. InvestingPro data reveals that Ellington maintains an attractive 11.85% dividend yield and has consistently paid dividends for 16 consecutive years. Additionally, the quarter witnessed a substantial 39% growth in the home equity line of credit (HELOC), reverse mortgage, and commercial real estate (CRE) loan portfolios prior to securitization. Ellington successfully completed four securitizations during the quarter.

Despite these strong results, B.Riley has decided to maintain its full-year 2025 EPS estimate for Ellington at $1.68. The firm believes that while this forecast may be conservative, it still adequately covers the dividend payouts. Howlett’s commentary highlighted Ellington’s position as a "relative winner" within the mortgage real estate investment trust (mREIT) sector, attributing this to the company’s diverse portfolio and proven ability to capitalize on market opportunities.

Ellington’s stock currently trades at 1.01 times its most recently reported book value of $13.52 per share, a slight decrease from $13.66 in the third quarter. This valuation stands above the peer average of 0.77 times book value. The new price target of $15.00 reflects a potential total return of 20% and is based on a price-to-book value (PBV) multiple of 1.1 times, an increase from the previous multiple. InvestingPro analysis shows the company maintains a GOOD overall financial health score and trades at an attractive P/E ratio of 10.58, suggesting reasonable valuation relative to earnings. Subscribers can access the comprehensive Pro Research Report for deeper insights into Ellington’s financial position and growth prospects.

In other recent news, Ellington Financial Inc. announced a monthly dividend of $0.13 per share, scheduled for payment on March 25, 2025, to shareholders on record as of February 28, 2025. This move underscores the company’s commitment to returning value to its investors and indicates stable cash flow generation. Additionally, Ellington Financial completed a $243 million securitization backed by proprietary reverse mortgage loans. The loans, originated by its fully owned subsidiary Longbridge Financial, received high ratings from Morningstar DBRS, with the top tranches achieving AAA(sf) ratings. Ellington Financial retained certain portions of the securitization in compliance with credit risk retention regulations. These developments are part of Ellington Financial’s broader strategy to manage a diverse portfolio of financial assets. Investors are encouraged to review the company’s financial statements and disclosures for a deeper understanding of its performance and associated risks.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.