Analyzing Ellington Credit (NYSE:EARN) and ONEX (OTCMKTS:ONEXF)

Ellington Credit (NYSE:EARN) and ONEX (OTCMKTS:ONEXF) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, analyst recommendations, valuation, profitability, earnings and dividends.

Profitability

This table compares Ellington Credit and ONEX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ellington Credit	-70.52%	N/A	N/A
ONEX	63.83%	5.24%	4.21%

Risk & Volatility

Ellington Credit has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, ONEX has a beta of 1.25, meaning that its stock price is 25% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Ellington Credit and ONEX, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ellington Credit	0	0	1	0	3.00
ONEX	0	2	3	0	2.60

Ellington Credit currently has a consensus price target of $5.50, indicating a potential upside of 57.50%. Given Ellington Credit’s stronger consensus rating and higher probable upside, equities analysts clearly believe Ellington Credit is more favorable than ONEX.

Earnings and Valuation

This table compares Ellington Credit and ONEX”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ellington Credit	$51.80 million	2.57	-$38.85 million	($0.98)	-3.56
ONEX	$899.00 million	6.01	$617.00 million	$6.68	10.61

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

Dividends

Ellington Credit pays an annual dividend of $0.96 per share and has a dividend yield of 27.5%. ONEX pays an annual dividend of $0.28 per share and has a dividend yield of 0.4%. Ellington Credit pays out -98.0% of its earnings in the form of a dividend. ONEX pays out 4.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Ellington Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

20.4% of Ellington Credit shares are owned by institutional investors. Comparatively, 0.7% of ONEX shares are owned by institutional investors. 1.4% of Ellington Credit shares are owned 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.

Summary

ONEX beats Ellington Credit on 9 of the 16 factors compared between the two stocks.

About Ellington Credit

Ellington Credit Company, a real estate investment trust, acquires, invests in, and manages residential mortgage-and real estate-related assets. It acquires and manages residential mortgage-backed securities (RMBS), including agency pools and agency collateralized mortgage obligations (CMOs); and non-agency RMBS, such as non-agency CMOs, such as investment grade and non-investment grade. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. The company was formerly known as Ellington Residential Mortgage REIT and changed its name to Ellington Credit Company in April 2024. Ellington Credit Company was incorporated in 2012 and is based in Old Greenwich, Connecticut.

About ONEX

Onex Corporation is a private equity firm specializing in acquisitions and platform acquisitions. The firm makes investments in buyouts, large- middle market, large-cap, mid-cap, and small-cap market and distressed companies. It also invests in recapitalization, growth capital, corporate carve-outs of subsidiaries and mission-critical supply divisions from multinational corporations, operational restructurings of undervalued businesses, and builds up. The firm seeks to invest in technology, electronics manufacturing services, industrial, aerospace, healthcare, retail, restaurants, industrials products, customer care services, metal services, building products, entertainment, gaming, cabinetry products, commercial vehicles, commercial and investment banking, financial services, commercial and multi-unit residential real estate. It invests in global businesses headquartered in North America, including United States and Canada, or Europe. The firm seeks to invest between $125 million and $1 billion in companies that have minimum revenues of $300 million. It does not consider size if the company is in an industry in which the firm already has presence. The firm seeks to make direct as well as co-investments through managed private equity, real estate and credit funds. It seeks to acquire a control position in its portfolio companies. Onex Corporation was founded in 1984 and is based in Toronto, Canada with additional offices in New York, New York; Englewood Cliffs, New Jersey; Boston, Massachusetts and London, United Kingdom.