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

Analyst Recommendations

This is a breakdown of current recommendations for FirstService and Ellington Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FirstService 0 4 0 0 2.00
Ellington Financial 0 2 3 0 2.60

FirstService currently has a consensus price target of $85.50, suggesting a potential downside of 0.87%. Ellington Financial has a consensus price target of $17.90, suggesting a potential upside of 12.37%. Given Ellington Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Ellington Financial is more favorable than FirstService.

Profitability

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

Net Margins Return on Equity Return on Assets
FirstService 3.24% 32.88% 7.48%
Ellington Financial 51.11% 5.85% 1.15%

Dividends

FirstService pays an annual dividend of $0.54 per share and has a dividend yield of 0.6%. Ellington Financial pays an annual dividend of $1.64 per share and has a dividend yield of 10.3%. FirstService pays out 26.6% of its earnings in the form of a dividend. 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. FirstService has raised its dividend for 2 consecutive years.

Volatility & Risk

FirstService has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500. Comparatively, Ellington Financial has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500.

Insider and Institutional Ownership

64.2% of FirstService shares are held by institutional investors. Comparatively, 46.8% of Ellington Financial shares are held by institutional investors. 11.1% of Ellington Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares FirstService and Ellington Financial’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FirstService $1.71 billion 1.75 $53.07 million $2.03 42.49
Ellington Financial $93.96 million 5.11 $33.98 million $1.08 14.75

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

Summary

FirstService beats Ellington Financial on 10 of the 17 factors compared between the two stocks.

About FirstService

FirstService Corporation provides property services to residential and commercial customers in the United States and Canada. The company operates through two segments, FirstService Residential and FirstService Brands. The FirstService Residential segment manages private residential communities, such as condominiums, co-operatives, homeowner associations, master-planned communities, active adult and lifestyle communities, and various other residential developments. This segment also offers a range of ancillary services, including on-site staffing for building engineering and maintenance, full-service swimming pool and amenity management, security and concierge/front desk, and landscaping; and financial services comprising cash management, other banking transaction-related services, and specialized property insurance brokerage. In addition, this segment provides energy management solutions and advisory services, and resale processing services. The FirstService Brands segment offers property services through 6 franchise networks; and company-owned locations, including 15 California Closets locations and 6 Paul Davis Restoration location. It offers residential and commercial restoration, painting, and floor coverings design and installation services; custom-designed and installed closet, and home storage solutions; home inspection services; exterior residential painting and window cleaning services; fire protection services; and heating, ventilation, and air conditioning services, as well as related services. This segment provides its services primarily under the Paul Davis Restoration, CertaPro Painters, California Closets, Pillar to Post Home Inspectors, Floor Coverings International, College Pro Painters, Century Fire Protection, and Service America brand names. FirstService Corporation was founded in 1988 and is headquartered in Toronto, Canada.

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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