Critical Contrast: Piper Sandler Companies (NYSE:PIPR) & Ellington Credit (NYSE:EARN)

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

Profitability

This table compares Ellington Credit and Piper Sandler Companies’ 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
Piper Sandler Companies	14.53%	21.11%	14.10%

Volatility and Risk

Ellington Credit has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, Piper Sandler Companies has a beta of 1.39, meaning that its stock price is 39% more volatile than the S&P 500.

Institutional & Insider Ownership

20.4% of Ellington Credit shares are owned by institutional investors. Comparatively, 72.8% of Piper Sandler Companies shares are owned by institutional investors. 1.4% of Ellington Credit shares are owned by insiders. Comparatively, 3.1% of Piper Sandler Companies shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations for Ellington Credit and Piper Sandler Companies, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ellington Credit	0	0	1	0	3.00
Piper Sandler Companies	2	1	3	0	2.17

Ellington Credit currently has a consensus price target of $5.25, suggesting a potential upside of 66.51%. Piper Sandler Companies has a consensus price target of $84.00, suggesting a potential upside of 25.50%. Given Ellington Credit’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Ellington Credit is more favorable than Piper Sandler Companies.

Dividends

Ellington Credit pays an annual dividend of $0.96 per share and has a dividend yield of 30.4%. Piper Sandler Companies pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Ellington Credit pays out -98.0% of its earnings in the form of a dividend. Piper Sandler Companies pays out 18.8% 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. Piper Sandler Companies has raised its dividend for 1 consecutive years. Ellington Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Ellington Credit and Piper Sandler Companies”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ellington Credit	$51.80 million	2.32	-$38.85 million	($0.98)	-3.22
Piper Sandler Companies	$1.90 billion	2.48	$281.33 million	$4.25	15.75

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

Summary

Piper Sandler Companies beats Ellington Credit on 13 of the 17 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 Piper Sandler Companies

Piper Sandler Companies operates as an investment bank and institutional securities firm that serves corporations, private equity groups, public entities, non-profit entities, and institutional investors in the United States and internationally. The company offers investment banking and institutional sales, trading, and research services for various equity and fixed income products. It provides advisory services, such as mergers and acquisitions, equity private placements, and debt and restructuring advisory; raises capital through equity and debt financings; underwrites municipal issuances; and offers municipal financial advisory and loan placement services, as well as various over-the-counter derivative products. The company also offers public finance investment banking services that focus on state and local governments, and cultural and social service non-profit entities, as well as the education, healthcare, hospitality, senior living, and transportation sectors. In addition, it provides equity and fixed income advisory and trade execution services for institutional investors, and government and non-profit entities. Further, the company is involved in the alternative asset management funds merchant banking and healthcare to invest firm capital and to manage capital from outside investors, as well as trading activities. The company was formerly known as Piper Jaffray Companies and changed its name to Piper Sandler Companies in January 2020. Piper Sandler Companies was founded in 1895 and is headquartered in Minneapolis, Minnesota.