Financial Survey: UDR (NYSE:UDR) and Ellington Residential Mortgage REIT (NYSE:EARN)

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UDR (NYSE:UDR) and Ellington Residential Mortgage REIT (NYSE:EARN) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, valuation, earnings, dividends, institutional ownership, risk and analyst recommendations.

Institutional & Insider Ownership

97.7% of UDR shares are owned by institutional investors. Comparatively, 62.0% of Ellington Residential Mortgage REIT shares are owned by institutional investors. 2.9% of UDR shares are owned by company insiders. Comparatively, 2.4% of Ellington Residential Mortgage REIT shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for UDR and Ellington Residential Mortgage REIT, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
UDR 3 6 3 0 2.00
Ellington Residential Mortgage REIT 0 0 0 0 N/A

UDR currently has a consensus target price of $43.44, suggesting a potential downside of 4.10%. Given UDR’s higher possible upside, research analysts clearly believe UDR is more favorable than Ellington Residential Mortgage REIT.

Profitability

This table compares UDR and Ellington Residential Mortgage REIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
UDR 13.70% 5.38% 1.92%
Ellington Residential Mortgage REIT 8.39% 9.78% 0.94%

Dividends

UDR pays an annual dividend of $1.37 per share and has a dividend yield of 3.0%. Ellington Residential Mortgage REIT pays an annual dividend of $1.12 per share and has a dividend yield of 10.0%. UDR pays out 69.9% of its earnings in the form of a dividend. Ellington Residential Mortgage REIT pays out 83.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. UDR has raised its dividend for 9 consecutive years.

Valuation and Earnings

This table compares UDR and Ellington Residential Mortgage REIT’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
UDR $1.05 billion 12.19 $203.10 million $1.96 23.11
Ellington Residential Mortgage REIT $54.55 million 2.60 -$11.30 million $1.34 8.39

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

Volatility and Risk

UDR has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, Ellington Residential Mortgage REIT has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500.

Summary

UDR beats Ellington Residential Mortgage REIT on 13 of the 16 factors compared between the two stocks.

UDR Company Profile

UDR, Inc. (NYSE: UDR), an S&P 500 company, is a leading multifamily real estate investment trust with a demonstrated performance history of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate properties in targeted U.S. markets. As of March 31, 2019, UDR owned or had an ownership position in 49,795 apartment homes including 366 homes under development. For over 46 years, UDR has delivered long-term value to shareholders, the best standard of service to residents and the highest quality experience for associates.

Ellington Residential Mortgage REIT Company Profile

Ellington Residential Mortgage REIT, a real estate investment trust, specializes in acquiring, investing in, and managing 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 comprising 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. Ellington Residential Mortgage REIT was founded in 2012 and is based in Old Greenwich, Connecticut.

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