Head-To-Head Survey: Ellington Financial (EFC) vs. Ocwen Financial (OCN)

Ellington Financial (NYSE: EFC) and Ocwen Financial (NYSE:OCN) are both small-cap financials companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, dividends, profitability, risk and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
Ellington Financial 31.55% 5.79% 1.37%
Ocwen Financial -7.56% -19.14% -1.49%

Volatility & Risk

Ellington Financial has a beta of 0.41, suggesting that its stock price is 59% less volatile than the S&P 500. Comparatively, Ocwen Financial has a beta of 1.54, suggesting that its stock price is 54% more volatile than the S&P 500.

Valuation and Earnings

This table compares Ellington Financial and Ocwen Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ellington Financial $80.18 million 5.76 -$16.00 million $0.88 16.45
Ocwen Financial $1.39 billion 0.29 -$199.76 million ($0.75) -4.09

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

Analyst Ratings

This is a summary of current recommendations for Ellington Financial and Ocwen Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ellington Financial 0 1 5 0 2.83
Ocwen Financial 0 4 0 0 2.00

Ellington Financial presently has a consensus target price of $17.42, indicating a potential upside of 20.28%. Ocwen Financial has a consensus target price of $3.33, indicating a potential upside of 8.58%. Given Ellington Financial’s stronger consensus rating and higher possible upside, research analysts clearly believe Ellington Financial is more favorable than Ocwen Financial.

Insider and Institutional Ownership

45.7% of Ellington Financial shares are owned by institutional investors. Comparatively, 45.9% of Ocwen Financial shares are owned by institutional investors. 10.6% of Ellington Financial shares are owned by company insiders. Comparatively, 2.4% of Ocwen Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Ellington Financial pays an annual dividend of $1.64 per share and has a dividend yield of 11.3%. Ocwen Financial does not pay a dividend. Ellington Financial pays out 186.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Ellington Financial beats Ocwen Financial on 12 of the 16 factors compared between the two stocks.

Ellington Financial Company Profile

Ellington Financial LLC is a specialty finance company that acquires and manages mortgage-related and other financial assets. The Company’s targeted assets include residential mortgage-backed securities (RMBS), backed by loans for which the principal and interest payments are not guaranteed by a United States Government agency or a United States Government-sponsored entity, collectively referred to as non-Agency RMBS; RMBS for which the principal and interest payments are guaranteed by the United States government agency or the United States government-sponsored entity (Agency RMBS); consumer loans and asset-backed securities (ABS) backed by consumer loans; commercial mortgage-backed securities (CMBS) commercial mortgage loans and other commercial real estate debt; residential mortgage loans; collateralized loan obligations (CLOs); corporate debt and equity, including distressed debt and equity, and mortgage-related derivatives.

Ocwen Financial Company Profile

Ocwen Financial Corporation is a financial services holding company. The Company, through its subsidiaries, originates and services loans. The Company’s segments include Servicing, Lending, and Corporate Items and Other. The Company’s Servicing segment consists of its residential servicing business. The Company’s Lending segment is focused on originating and purchasing conventional and government-insured residential forward and reverse mortgage loans. The Company’s Corporate Items and Other segment includes revenues and expenses of Automotive Capital Services (ACS) and its other business activities. Its servicing clients include some of the financial institutions in the United States, including the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), the Government National Mortgage Association (Ginnie Mae) and non-Agency residential mortgage-backed securities (RMBS) trusts.

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