Critical Comparison: Ellington Credit (NYSE:EARN) versus Hamilton Lane (NASDAQ:HLNE)

Hamilton Lane (NASDAQ:HLNE) and Ellington Credit (NYSE:EARN) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, profitability, risk, analyst recommendations, dividends and institutional ownership.

Institutional and Insider Ownership

97.4% of Hamilton Lane shares are owned by institutional investors. Comparatively, 20.4% of Ellington Credit shares are owned by institutional investors. 24.0% of Hamilton Lane shares are owned by insiders. Comparatively, 1.4% of Ellington Credit shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Hamilton Lane and Ellington Credit”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hamilton Lane	$758.99 million	7.02	$249.18 million	$6.56	14.63
Ellington Credit	$51.80 million	3.19	-$38.85 million	($0.98)	-4.41

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

Profitability

This table compares Hamilton Lane and Ellington Credit’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hamilton Lane	32.14%	25.10%	15.75%
Ellington Credit	-70.52%	N/A	N/A

Volatility and Risk

Hamilton Lane has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500. Comparatively, Ellington Credit has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Hamilton Lane and Ellington Credit, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hamilton Lane	0	2	6	1	2.89
Ellington Credit	0	1	1	0	2.50

Hamilton Lane currently has a consensus price target of $131.57, indicating a potential upside of 37.08%. Ellington Credit has a consensus price target of $5.50, indicating a potential upside of 27.17%. Given Hamilton Lane’s stronger consensus rating and higher possible upside, research analysts plainly believe Hamilton Lane is more favorable than Ellington Credit.

Dividends

Hamilton Lane pays an annual dividend of $2.40 per share and has a dividend yield of 2.5%. Ellington Credit pays an annual dividend of $0.96 per share and has a dividend yield of 22.2%. Hamilton Lane pays out 36.6% 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. Hamilton Lane has increased its dividend for 8 consecutive years. Ellington Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Hamilton Lane beats Ellington Credit on 15 of the 18 factors compared between the two stocks.

About Hamilton Lane

Hamilton Lane Incorporated is a private equity firm specializing in early venture, emerging growth, turnaround, middle market, mature, mid-venture, bridge, buyout, distressed/vulture, loan, mezzanine in growth capital companies. It prefers to invest in energy, industrials, consumer discretionary, health care, real estate, information technology, utilities, and consumer services. The firm prefers to invest in Africa/Middle East, Asia/Pacific, Europe, Latin America and Caribbean, United States of America, and Canada. The firm prefers to invest between $1 million and $100 million. It prefers to take majority stake. Hamilton Lane Incorporated was founded in 1991 and is based in Conshohocken, Pennsylvania with additional offices across Europe, North America, Asia Pacific and the Middle East.

About Ellington Credit

Ellington Credit Company, a real estate investment trust, acquires, invests in, and manages 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, such as 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. The company was formerly known as Ellington Residential Mortgage REIT and changed its name to Ellington Credit Company in April 2024. Ellington Credit Company was incorporated in 2012 and is based in Old Greenwich, Connecticut.