ELLINGTON CREDIT CO (EARN) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:EARN - US2885781078
5.65 USD
-0.03 (-0.53%)
5.69 USD
+0.04 (+0.71%)
Overall EARN gets a fundamental rating of 4 out of 10. We evaluated EARN against 237 industry peers in the Capital Markets industry. EARN has a medium profitability rating, but doesn't score so well on its financial health evaluation. EARN has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
- In the past year EARN was profitable.
- EARN had a positive operating cash flow in the past year.
- The reported net income has been mixed in the past 5 years: EARN reported negative net income in multiple years.
- Of the past 5 years EARN 4 years had a positive operating cash flow.
1.2 Ratios
- EARN has a Return On Assets (3.39%) which is in line with its industry peers.
- EARN has a Return On Equity of 6.28%. This is comparable to the rest of the industry: EARN outperforms 45.15% of its industry peers.
- EARN has a better Return On Invested Capital (7.18%) than 78.48% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.39% | ||
| ROE | 6.28% | ||
| ROIC | 7.18% |
ROA(3y)-0.53%
ROA(5y)-0.06%
ROE(3y)-6.71%
ROE(5y)-2.43%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
- EARN has a Profit Margin (21.40%) which is in line with its industry peers.
- EARN's Profit Margin has declined in the last couple of years.
- EARN has a better Operating Margin (48.59%) than 86.50% of its industry peers.
- In the last couple of years the Operating Margin of EARN has grown nicely.
- Looking at the Gross Margin, with a value of 57.52%, EARN is in the better half of the industry, outperforming 64.98% of the companies in the same industry.
- EARN's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 48.59% | ||
| PM (TTM) | 21.4% | ||
| GM | 57.52% |
OM growth 3Y-43.57%
OM growth 5Y11%
PM growth 3YN/A
PM growth 5Y-23.61%
GM growth 3Y-38.4%
GM growth 5Y9.83%
2. Health
2.1 Basic Checks
- Compared to 1 year ago, EARN has more shares outstanding
- EARN has more shares outstanding than it did 5 years ago.
- The debt/assets ratio for EARN has been reduced compared to a year ago.
2.2 Solvency
- EARN has an Altman-Z score of 0.05. This is a bad value and indicates that EARN is not financially healthy and even has some risk of bankruptcy.
- EARN has a Altman-Z score of 0.05. This is in the lower half of the industry: EARN underperforms 73.00% of its industry peers.
- The Debt to FCF ratio of EARN is 0.47, which is an excellent value as it means it would take EARN, only 0.47 years of fcf income to pay off all of its debts.
- With an excellent Debt to FCF ratio value of 0.47, EARN belongs to the best of the industry, outperforming 91.98% of the companies in the same industry.
- A Debt/Equity ratio of 0.78 indicates that EARN is somewhat dependend on debt financing.
- Looking at the Debt to Equity ratio, with a value of 0.78, EARN is in line with its industry, outperforming 56.12% of the companies in the same industry.
- Although EARN does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.78 | ||
| Debt/FCF | 0.47 | ||
| Altman-Z | 0.05 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
- A Current Ratio of 0.18 indicates that EARN may have some problems paying its short term obligations.
- EARN has a worse Current ratio (0.18) than 88.61% of its industry peers.
- EARN has a Quick Ratio of 0.18. This is a bad value and indicates that EARN is not financially healthy enough and could expect problems in meeting its short term obligations.
- EARN has a worse Quick ratio (0.18) than 88.61% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.18 | ||
| Quick Ratio | 0.18 |
3. Growth
3.1 Past
- EARN shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -70.49%.
- Measured over the past years, EARN shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -31.03% on average per year.
- EARN shows a strong growth in Revenue. In the last year, the Revenue has grown by 34.92%.
- The Revenue has been growing slightly by 2.60% on average over the past years.
EPS 1Y (TTM)-70.49%
EPS 3YN/A
EPS 5Y-31.03%
EPS Q2Q%71.43%
Revenue 1Y (TTM)34.92%
Revenue growth 3Y20.7%
Revenue growth 5Y2.6%
Sales Q2Q%163.4%
3.2 Future
- EARN is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.49% yearly.
- EARN is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 13.03% yearly.
EPS Next Y11.36%
EPS Next 2Y6.49%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue Next Year17.28%
Revenue Next 2Y13.03%
Revenue Next 3YN/A
Revenue Next 5YN/A
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
- The Price/Earnings ratio is 17.12, which indicates a rather expensive current valuation of EARN.
- The rest of the industry has a similar Price/Earnings ratio as EARN.
- When comparing the Price/Earnings ratio of EARN to the average of the S&P500 Index (28.60), we can say EARN is valued slightly cheaper.
- A Price/Forward Earnings ratio of 5.46 indicates a rather cheap valuation of EARN.
- 94.94% of the companies in the same industry are more expensive than EARN, based on the Price/Forward Earnings ratio.
- EARN's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 25.83.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.12 | ||
| Fwd PE | 5.46 |
4.2 Price Multiples
- EARN's Price/Free Cash Flow ratio is rather cheap when compared to the industry. EARN is cheaper than 98.31% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 0.58 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
- EARN's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
PEG (NY)1.51
PEG (5Y)N/A
EPS Next 2Y6.49%
EPS Next 3YN/A
5. Dividend
5.1 Amount
- EARN has a Yearly Dividend Yield of 17.91%, which is a nice return.
- EARN's Dividend Yield is rather good when compared to the industry average which is at 5.87. EARN pays more dividend than 94.09% of the companies in the same industry.
- EARN's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 17.91% |
5.2 History
- The dividend of EARN decreases each year by -5.74%.
- EARN has paid a dividend for at least 10 years, which is a reliable track record.
- The dividend of EARN decreased recently.
Dividend Growth(5Y)-5.74%
Div Incr Years0
Div Non Decr Years1
5.3 Sustainability
- EARN pays out 78.47% of its income as dividend. This is not a sustainable payout ratio.
DP78.47%
EPS Next 2Y6.49%
EPS Next 3YN/A
ELLINGTON CREDIT CO / EARN FAQ
What is the ChartMill fundamental rating of ELLINGTON CREDIT CO (EARN) stock?
ChartMill assigns a fundamental rating of 4 / 10 to EARN.
What is the valuation status of ELLINGTON CREDIT CO (EARN) stock?
ChartMill assigns a valuation rating of 5 / 10 to ELLINGTON CREDIT CO (EARN). This can be considered as Fairly Valued.
What is the profitability of EARN stock?
ELLINGTON CREDIT CO (EARN) has a profitability rating of 5 / 10.
Can you provide the PE and PB ratios for EARN stock?
The Price/Earnings (PE) ratio for ELLINGTON CREDIT CO (EARN) is 17.12 and the Price/Book (PB) ratio is 0.94.
How financially healthy is ELLINGTON CREDIT CO?
The financial health rating of ELLINGTON CREDIT CO (EARN) is 3 / 10.