Head-To-Head Analysis: Ellington Credit (NYSE:EARN) & Hennessy Advisors (NASDAQ:HNNA)
by Michael Walen · The Markets DailyEllington Credit (NYSE:EARN – Get Free Report) and Hennessy Advisors (NASDAQ:HNNA – Get Free Report) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, risk, analyst recommendations, dividends, valuation and profitability.
Profitability
This table compares Ellington Credit and Hennessy Advisors’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ellington Credit | -70.52% | N/A | N/A |
| Hennessy Advisors | 24.77% | 8.31% | 5.48% |
Analyst Ratings
This is a breakdown of current ratings and price targets for Ellington Credit and Hennessy Advisors, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ellington Credit | 0 | 0 | 1 | 0 | 3.00 |
| Hennessy Advisors | 0 | 1 | 0 | 0 | 2.00 |
Ellington Credit presently has a consensus target price of $5.25, indicating a potential upside of 60.35%. Given Ellington Credit’s stronger consensus rating and higher possible upside, research analysts plainly believe Ellington Credit is more favorable than Hennessy Advisors.
Volatility & Risk
Ellington Credit has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500. Comparatively, Hennessy Advisors has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500.
Insider & Institutional Ownership
20.4% of Ellington Credit shares are held by institutional investors. Comparatively, 10.3% of Hennessy Advisors shares are held by institutional investors. 1.4% of Ellington Credit shares are held by insiders. Comparatively, 36.0% of Hennessy Advisors shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Ellington Credit and Hennessy Advisors”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Ellington Credit | $51.80 million | 2.41 | -$38.85 million | ($0.98) | -3.34 |
| Hennessy Advisors | $35.54 million | 2.27 | $9.96 million | $1.04 | 9.80 |
Hennessy Advisors has lower revenue, but higher earnings than Ellington Credit. Ellington Credit is trading at a lower price-to-earnings ratio than Hennessy Advisors, indicating that it is currently the more affordable of the two stocks.
Dividends
Ellington Credit pays an annual dividend of $0.96 per share and has a dividend yield of 29.3%. Hennessy Advisors pays an annual dividend of $0.60 per share and has a dividend yield of 5.9%. Ellington Credit pays out -98.0% of its earnings in the form of a dividend. Hennessy Advisors pays out 57.7% 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. Ellington Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
Ellington Credit beats Hennessy Advisors on 9 of the 16 factors compared between the two stocks.
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.
About Hennessy Advisors
Hennessy Advisors, Inc. is an employee owned investment manager. It provides its services to Hennessy Funds and investment companies. The firm launches and manages equity, fixed income, and balanced mutual funds. It invests in the public equity and fixed income markets across the globe. The firm primarily invests in growth stocks of companies. It conducts in-house research to make its investments. Hennessy Advisors, Inc. was founded in 1989 and is based in Novato, California with additional offices in Boston, Massachusetts and Chapel Hill, North Carolina.