Financial Analysis: Ellington Credit (NYSE:EARN) vs. Generation Income Properties (NASDAQ:GIPR)

Generation Income Properties (NASDAQ:GIPR) and Ellington Credit (NYSE:EARN) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, institutional ownership, profitability and risk.

Institutional & Insider Ownership

20.7% of Generation Income Properties shares are owned by institutional investors. Comparatively, 20.4% of Ellington Credit shares are owned by institutional investors. 5.6% of Generation Income Properties shares are owned by company insiders. Comparatively, 1.4% of Ellington Credit shares are owned by company 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.

Dividends

Generation Income Properties pays an annual dividend of $0.46 per share and has a dividend yield of 44.2%. Ellington Credit pays an annual dividend of $0.96 per share and has a dividend yield of 18.2%. Generation Income Properties pays out -24.2% of its earnings in the form of a dividend. Ellington Credit pays out 533.3% 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.

Earnings & Valuation

This table compares Generation Income Properties and Ellington Credit”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Generation Income Properties	$9.88 million	0.57	-$8.35 million	($1.90)	-0.55
Ellington Credit	$15.07 million	13.11	$6.59 million	$0.18	29.23

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

Risk & Volatility

Generation Income Properties has a beta of -0.05, suggesting that its stock price is 105% less volatile than the S&P 500. Comparatively, Ellington Credit has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Generation Income Properties and Ellington Credit, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Generation Income Properties	1	0	0	0	1.00
Ellington Credit	0	1	1	0	2.50

Ellington Credit has a consensus price target of $5.88, indicating a potential upside of 11.65%. Given Ellington Credit’s stronger consensus rating and higher probable upside, analysts plainly believe Ellington Credit is more favorable than Generation Income Properties.

Profitability

This table compares Generation Income Properties and Ellington Credit’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 Credit	19.24%	15.90%	3.89%

Summary

Ellington Credit beats Generation Income Properties on 12 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 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.