Analyzing Generation Income Properties (NASDAQ:GIPR) and Ellington Financial (NYSE:EFC)

Generation Income Properties (NASDAQ:GIPR) 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 earnings, analyst recommendations, profitability, risk, valuation, institutional ownership and dividends.

Valuation & Earnings

This table compares Generation Income Properties and Ellington Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Generation Income Properties	$9.88 million	0.99	-$8.35 million	($1.90)	-0.95
Ellington Financial	$285.59 million	4.72	$145.86 million	$1.24	10.88

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

Insider and Institutional Ownership

20.7% of Generation Income Properties shares are held by institutional investors. Comparatively, 55.6% of Ellington Financial shares are held by institutional investors. 5.6% of Generation Income Properties 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 endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Generation Income Properties has a beta of -0.1, suggesting that its stock price is 110% less volatile than the S&P 500. Comparatively, Ellington Financial has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.

Dividends

Generation Income Properties pays an annual dividend of $0.46 per share and has a dividend yield of 25.6%. Ellington Financial pays an annual dividend of $1.56 per share and has a dividend yield of 11.6%. Generation Income Properties pays out -24.2% of its earnings in the form of a dividend. Ellington Financial pays out 125.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Generation Income Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current recommendations and price targets for Generation Income Properties and Ellington Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Generation Income Properties	1	0	0	0	1.00
Ellington Financial	0	3	5	0	2.63

Ellington Financial has a consensus price target of $14.46, indicating a potential upside of 7.22%. Given Ellington Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Ellington Financial is more favorable than Generation Income Properties.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Generation Income Properties	-105.40%	-247.43%	-8.66%
Ellington Financial	89.52%	13.56%	1.07%

Summary

Ellington Financial beats Generation Income Properties on 13 of the 16 factors compared between the two stocks.

About Generation Income Properties

Generation Income Properties, Inc., located in Tampa, Florida, is an internally managed real estate investment trust formed to acquire and own, directly and jointly, real estate investments focused on retail, office, and industrial net lease properties in densely populated submarkets.

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.