Financial Contrast: Ellington Financial (EFC) and Porter Bancorp (PBIB)

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

Dividends

Ellington Financial pays an annual dividend of $1.80 per share and has a dividend yield of 11.2%. Porter Bancorp does not pay a dividend. Ellington Financial pays out 257.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

Ellington Financial has a beta of 0.44, indicating that its share price is 56% less volatile than the S&P 500. Comparatively, Porter Bancorp has a beta of 1.72, indicating that its share price is 72% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Ellington Financial and Porter Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ellington Financial	0	0	3	0	3.00
Porter Bancorp	0	0	0	0	N/A

Ellington Financial presently has a consensus price target of $19.17, indicating a potential upside of 19.49%. Given Ellington Financial’s higher possible upside, equities research analysts clearly believe Ellington Financial is more favorable than Porter Bancorp.

Earnings and Valuation

This table compares Ellington Financial and Porter Bancorp’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Ellington Financial	$69.62 million	7.40	$22.48 million	$0.70	22.91
Porter Bancorp	$35.80 million	1.87	-$2.01 million	($0.33)	-33.23

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

Institutional & Insider Ownership

51.0% of Ellington Financial shares are held by institutional investors. Comparatively, 18.4% of Porter Bancorp shares are held by institutional investors. 10.6% of Ellington Financial shares are held by insiders. Comparatively, 28.7% of Porter Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ellington Financial	26.67%	5.48%	1.32%
Porter Bancorp	-4.59%	-5.33%	-0.20%

Summary

Ellington Financial beats Porter Bancorp on 11 of the 14 factors compared between the two stocks.

About Ellington Financial

Ellington Financial LLC is a specialty finance company that acquires and manages mortgage-related and other financial assets. The Company’s targeted assets include residential mortgage-backed securities (RMBS), backed by loans for which the principal and interest payments are not guaranteed by a United States Government agency or a United States Government-sponsored entity, collectively referred to as non-Agency RMBS; RMBS for which the principal and interest payments are guaranteed by the United States government agency or the United States government-sponsored entity (Agency RMBS); consumer loans and asset-backed securities (ABS) backed by consumer loans; commercial mortgage-backed securities (CMBS) commercial mortgage loans and other commercial real estate debt; residential mortgage loans; collateralized loan obligations (CLOs); corporate debt and equity, including distressed debt and equity, and mortgage-related derivatives.

About Porter Bancorp

Porter Bancorp, Inc. is a bank holding company. The Company operates through its subsidiary, PBI Bank (the Bank). The Bank is a community bank with a range of commercial and personal banking products. It offers retail and commercial deposit products. It offers drive-in banking facilities, automatic teller machines, night depository, personalized checks, credit cards, debit cards, Internet banking, mobile banking, treasury management services, remote deposit services, electronic funds transfers through automated clearing house services, domestic and foreign wire transfers, cash management, vault services, and loan and deposit sweep accounts. It operates banking offices in approximately 12 counties in Kentucky. Its markets include metropolitan Louisville in Jefferson County and the surrounding counties of Henry and Bullitt. It serves south central Kentucky and southern Kentucky from banking offices in Butler, Green, Hart, Edmonson, Barren, Warren, Ohio and Daviess Counties.