Chimera Investment (NYSE: CIM) and Ellington Residential Mortgage REIT (NYSE:EARN) are both financials companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.
Institutional & Insider Ownership
50.1% of Chimera Investment shares are held by institutional investors. Comparatively, 68.4% of Ellington Residential Mortgage REIT shares are held by institutional investors. 0.7% of Chimera Investment shares are held by insiders. Comparatively, 2.7% of Ellington Residential Mortgage REIT shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
This table compares Chimera Investment and Ellington Residential Mortgage REIT’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Chimera Investment||$1.14 billion||2.94||$524.66 million||$2.61||6.84|
|Ellington Residential Mortgage REIT||$30.14 million||5.08||$10.79 million||$0.91||12.60|
Chimera Investment has higher revenue and earnings than Ellington Residential Mortgage REIT. Chimera Investment is trading at a lower price-to-earnings ratio than Ellington Residential Mortgage REIT, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Chimera Investment has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500. Comparatively, Ellington Residential Mortgage REIT has a beta of 0.46, suggesting that its share price is 54% less volatile than the S&P 500.
This is a breakdown of current ratings for Chimera Investment and Ellington Residential Mortgage REIT, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ellington Residential Mortgage REIT||0||1||0||0||2.00|
Chimera Investment currently has a consensus target price of $18.75, indicating a potential upside of 5.04%. Ellington Residential Mortgage REIT has a consensus target price of $14.00, indicating a potential upside of 22.06%. Given Ellington Residential Mortgage REIT’s higher probable upside, analysts clearly believe Ellington Residential Mortgage REIT is more favorable than Chimera Investment.
Chimera Investment pays an annual dividend of $2.00 per share and has a dividend yield of 11.2%. Ellington Residential Mortgage REIT pays an annual dividend of $1.48 per share and has a dividend yield of 12.9%. Chimera Investment pays out 76.6% 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 Residential Mortgage REIT pays out 162.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chimera Investment has raised its dividend for 3 consecutive years.
This table compares Chimera Investment and Ellington Residential Mortgage REIT’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ellington Residential Mortgage REIT||35.79%||12.07%||1.17%|
Chimera Investment beats Ellington Residential Mortgage REIT on 11 of the 17 factors compared between the two stocks.
About Chimera Investment
Chimera Investment Corporation is a real estate investment trust (REIT). The company is engaged in the business of investing in a portfolio of mortgage assets, including agency residential mortgage-backed security (RMBS), non-agency RMBS, agency commercial mortgage-backed securities (CMBS), residential mortgage loans and real estate related securities. The Company’s objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses to achieve this objective by investing in an investment portfolio of RMBS, agency CMBS, residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The MBS and real estate-related securities the Company purchases include investment-grade and non-investment grade classes, including the BB-rated, B-rated and non-rated classes. It also invests in investment grade and non-investment grade RMBS.
About Ellington Residential Mortgage REIT
Ellington Residential Mortgage REIT is a real estate investment trust. The Company conducts its business through its subsidiaries, EARN OP GP LLC and Ellington Residential Mortgage LP (the Operating Partnership). It specializes in acquiring, investing in and managing residential mortgage- and real estate-related assets. It constructs and managing a portfolio consisting of residential mortgage-backed securities (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) and, to a lesser extent, RMBS backed by prime jumbo, Alternative A-paper manufactured housing, and subprime residential mortgage loans (non-Agency RMBS). Its Agency RMBS include residential mortgage pass-through certificates, collateralized mortgage obligations (CMOs) and to-be-announced mortgage pass-through certificates (TBAs). Its non-agency RMBS include investment grade and non-investment grade classes.
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