Contrasting Ellington Credit (NYSE:EARN) & Brookfield Asset Management (NYSE:BAM)

Brookfield Asset Management (NYSE:BAM) and Ellington Credit (NYSE:EARN) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, dividends, institutional ownership, profitability, valuation, analyst recommendations and risk.

Valuation and Earnings

This table compares Brookfield Asset Management and Ellington Credit”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brookfield Asset Management	$4.82 billion	17.07	$2.48 billion	$2.92	17.62
Ellington Credit	$51.80 million	2.41	-$38.85 million	($0.98)	-3.33

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

Risk and Volatility

Brookfield Asset Management has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500. Comparatively, Ellington Credit has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500.

Institutional & Insider Ownership

68.4% of Brookfield Asset Management shares are held by institutional investors. Comparatively, 20.4% of Ellington Credit shares are held by institutional investors. 11.0% of Brookfield Asset Management shares are held by company insiders. Comparatively, 1.4% of Ellington Credit shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Brookfield Asset Management	71.24%	30.24%	14.11%
Ellington Credit	-70.52%	N/A	N/A

Analyst Recommendations

This is a summary of recent ratings and target prices for Brookfield Asset Management and Ellington Credit, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brookfield Asset Management	0	7	7	1	2.60
Ellington Credit	0	0	1	0	3.00

Brookfield Asset Management presently has a consensus price target of $58.37, indicating a potential upside of 13.45%. Ellington Credit has a consensus price target of $5.25, indicating a potential upside of 60.80%. Given Ellington Credit’s stronger consensus rating and higher probable upside, analysts plainly believe Ellington Credit is more favorable than Brookfield Asset Management.

Dividends

Brookfield Asset Management pays an annual dividend of $2.01 per share and has a dividend yield of 3.9%. Ellington Credit pays an annual dividend of $0.96 per share and has a dividend yield of 29.4%. Brookfield Asset Management pays out 68.8% of its earnings in the form of a dividend. Ellington Credit pays out -98.0% 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. Brookfield Asset Management has raised its dividend for 2 consecutive years. Ellington Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Brookfield Asset Management beats Ellington Credit on 13 of the 18 factors compared between the two stocks.

About Brookfield Asset Management

Brookfield Asset Management is a global alternative asset manager that invests in and manages assets on behalf of institutional and private wealth clients. Its investment strategies span infrastructure, renewable power and transition, private equity, real estate, and credit. The company operates across North America, South America, Europe, the Middle East, and Asia-Pacific. Its businesses invest in and manage assets such as energy and transportation infrastructure, renewable power facilities, real estate, and companies across a range of industries.

About Ellington Credit

Ellington Credit Company is a specialty finance company that invests primarily in collateralized loan obligation (CLO) securities, including CLO debt and equity. CLOs are investment vehicles backed mainly by pools of corporate loans, and the company seeks to generate income and returns through its exposure to these securities. The company also invests in residential mortgage-backed securities and other mortgage-related assets. Its portfolio is managed by Ellington Credit Management LLC, an affiliate of Ellington Financial.