Government Properties Income Trust (NASDAQ: GOV) and Ellington Financial (NYSE:EFC) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, analyst recommendations, profitability, earnings and valuation.
This table compares Government Properties Income Trust and Ellington Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Government Properties Income Trust||3.16%||0.87%||0.32%|
This is a summary of recent ratings and recommmendations for Government Properties Income Trust and Ellington Financial, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Government Properties Income Trust||3||1||2||0||1.83|
Government Properties Income Trust currently has a consensus target price of $17.17, suggesting a potential upside of 29.36%. Ellington Financial has a consensus target price of $17.20, suggesting a potential upside of 7.37%. Given Government Properties Income Trust’s higher possible upside, analysts plainly believe Government Properties Income Trust is more favorable than Ellington Financial.
Risk and Volatility
Government Properties Income Trust has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, Ellington Financial has a beta of 0.3, meaning that its share price is 70% less volatile than the S&P 500.
Insider and Institutional Ownership
58.3% of Government Properties Income Trust shares are held by institutional investors. Comparatively, 45.6% of Ellington Financial shares are held by institutional investors. 1.3% of Government Properties Income Trust shares are held by company insiders. Comparatively, 11.1% of Ellington Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Earnings and Valuation
This table compares Government Properties Income Trust and Ellington Financial’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Government Properties Income Trust||$316.53 million||4.16||$12.09 million||$2.02||6.57|
|Ellington Financial||$93.96 million||5.15||$33.98 million||$1.08||14.83|
Ellington Financial has lower revenue, but higher earnings than Government Properties Income Trust. Government Properties Income Trust is trading at a lower price-to-earnings ratio than Ellington Financial, indicating that it is currently the more affordable of the two stocks.
Government Properties Income Trust pays an annual dividend of $1.72 per share and has a dividend yield of 13.0%. Ellington Financial pays an annual dividend of $1.64 per share and has a dividend yield of 10.2%. Government Properties Income Trust pays out 85.1% 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 Financial pays out 151.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Government Properties Income Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.
Ellington Financial beats Government Properties Income Trust on 9 of the 16 factors compared between the two stocks.
About Government Properties Income Trust
GOV is a real estate investment trust, or REIT, which primarily owns properties located throughout the United States that are majority leased to the U.S. Government and other government tenants and office properties in the metropolitan Washington, D.C. market area that are leased to government and private sector tenants. GOV is managed by the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, Massachusetts.
About Ellington Financial
Ellington Financial LLC, through its subsidiary Ellington Financial Operating Partnership LLC, operates as a specialty finance company in the United States. The company acquires and manages mortgage-related assets, including residential mortgage-backed securities (RMBS) backed by prime jumbo, Alt-A, manufactured housing, and subprime residential mortgage loans; RMBS for which the principal and interest payments are guaranteed by the U.S. government agency or the U.S. government-sponsored entity; residential mortgage loans; commercial mortgage-backed securities; commercial mortgage loans and other commercial real estate debt; and residential mortgage loans. It also provides collateralized loan obligations; mortgage-related and non-mortgage-related derivatives; equity investments in mortgage-related entities; and other strategic investments, as well as invests in corporate debt and equity securities. In addition, it offers consumer loans and asset-backed securities backed by consumer and commercial assets. Ellington Financial LLC was founded in 2007 and is based in Old Greenwich, Connecticut.
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