Reviewing Chimera Investment (NYSE:CIM) and Ellington Financial (NYSE:EFC)

Chimera Investment (NYSE:CIM) and Ellington Financial (NYSE:EFC) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, analyst recommendations, earnings, valuation and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Chimera Investment	25.12%	7.25%	1.44%
Ellington Financial	101.59%	12.06%	0.95%

Insider and Institutional Ownership

48.4% of Chimera Investment shares are held by institutional investors. Comparatively, 55.6% of Ellington Financial shares are held by institutional investors. 0.9% of Chimera Investment shares are held by company insiders. Comparatively, 4.1% of Ellington Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

Chimera Investment has a beta of 1.79, indicating that its stock price is 79% more volatile than the S&P 500. Comparatively, Ellington Financial has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Chimera Investment and Ellington Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chimera Investment	0	2	1	0	2.33
Ellington Financial	0	1	4	0	2.80

Chimera Investment currently has a consensus price target of $15.50, indicating a potential upside of 15.24%. Ellington Financial has a consensus price target of $14.30, indicating a potential upside of 12.60%. Given Chimera Investment’s higher probable upside, research analysts clearly believe Chimera Investment is more favorable than Ellington Financial.

Dividends

Chimera Investment pays an annual dividend of $1.48 per share and has a dividend yield of 11.0%. Ellington Financial pays an annual dividend of $1.56 per share and has a dividend yield of 12.3%. Chimera Investment pays out 98.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ellington Financial pays out 110.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chimera Investment has increased its dividend for 1 consecutive years.

Valuation & Earnings

This table compares Chimera Investment and Ellington Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chimera Investment	$760.95 million	1.43	$176.07 million	$1.50	8.97
Ellington Financial	$284.66 million	4.22	$145.86 million	$1.41	9.01

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

Summary

Ellington Financial beats Chimera Investment on 9 of the 17 factors compared between the two stocks.

About Chimera Investment

Chimera Investment Corporation operates as a real estate investment trust (REIT) in the United States. The company, through its subsidiaries, invests in a portfolio of mortgage assets, including residential mortgage loans, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, agency mortgage-backed securities secured by pools of commercial mortgage loans, business purpose and investor loans, and other real estate related securities. It invests in investment grade, non-investment grade, and non-rated classes. The company qualifies as a real estate investment trust (REIT) for federal income tax purposes. As a REIT, it intends to distribute at least 90% of its taxable income as dividends to shareholders. Chimera Investment Corporation was incorporated in 2007 and is headquartered in New York, New York.

About Ellington Financial

Ellington Financial Inc., through its subsidiary, Ellington Financial Operating Partnership LLC, acquires and manages mortgage-related, consumer-related, corporate-related, and other financial assets in the United States. The company acquires and manages residential mortgage-backed securities (RMBS) backed by prime jumbo, Alt-A, manufactured housing, and subprime mortgage; 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; and commercial mortgage loans and other commercial real estate debt. It also provides collateralized loan obligations; mortgage-related and non-mortgage-related derivatives; corporate debt and equity securities; corporate loans; and other strategic investments; and consumer loans and asset-backed securities backed by consumer and commercial assets. The company qualifies as a real estate investment trust (REIT) for federal income tax purposes. As a REIT, it intends to distribute at least 90% of its taxable income as dividends to shareholders. Ellington Financial LLC was incorporated in 2007 and is headquartered in Old Greenwich, Connecticut.