Ellington Credit (NYSE:EARN – Get Free Report) and ONEX (OTCMKTS:ONEXF – Get Free Report) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, earnings, analyst recommendations, valuation, dividends and institutional ownership.
Volatility and Risk
Ellington Credit has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500. Comparatively, ONEX has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500.
Institutional & Insider Ownership
20.4% of Ellington Credit shares are held by institutional investors. Comparatively, 0.7% of ONEX shares are held by institutional investors. 1.4% of Ellington Credit shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Earnings & Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Ellington Credit | $51.80 million | 2.52 | -$38.85 million | ($0.98) | -3.48 |
| ONEX | $899.00 million | 6.12 | $617.00 million | $6.68 | 10.79 |
ONEX has higher revenue and earnings than Ellington Credit. Ellington Credit is trading at a lower price-to-earnings ratio than ONEX, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current recommendations and price targets for Ellington Credit and ONEX, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ellington Credit | 0 | 1 | 1 | 0 | 2.50 |
| ONEX | 0 | 2 | 3 | 0 | 2.60 |
Ellington Credit currently has a consensus target price of $5.50, suggesting a potential upside of 61.05%. Given Ellington Credit’s higher possible upside, research analysts clearly believe Ellington Credit is more favorable than ONEX.
Profitability
This table compares Ellington Credit and ONEX’s 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 |
| ONEX | 63.83% | 5.24% | 4.21% |
Dividends
Ellington Credit pays an annual dividend of $0.96 per share and has a dividend yield of 28.1%. ONEX pays an annual dividend of $0.28 per share and has a dividend yield of 0.4%. Ellington Credit pays out -98.0% of its earnings in the form of a dividend. ONEX pays out 4.2% 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
ONEX beats Ellington Credit on 10 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 ONEX
Onex Corporation is a private equity firm specializing in acquisitions and platform acquisitions. The firm makes investments in buyouts, large- middle market, large-cap, mid-cap, and small-cap market and distressed companies. It also invests in recapitalization, growth capital, corporate carve-outs of subsidiaries and mission-critical supply divisions from multinational corporations, operational restructurings of undervalued businesses, and builds up. The firm seeks to invest in technology, electronics manufacturing services, industrial, aerospace, healthcare, retail, restaurants, industrials products, customer care services, metal services, building products, entertainment, gaming, cabinetry products, commercial vehicles, commercial and investment banking, financial services, commercial and multi-unit residential real estate. It invests in global businesses headquartered in North America, including United States and Canada, or Europe. The firm seeks to invest between $125 million and $1 billion in companies that have minimum revenues of $300 million. It does not consider size if the company is in an industry in which the firm already has presence. The firm seeks to make direct as well as co-investments through managed private equity, real estate and credit funds. It seeks to acquire a control position in its portfolio companies. Onex Corporation was founded in 1984 and is based in Toronto, Canada with additional offices in New York, New York; Englewood Cliffs, New Jersey; Boston, Massachusetts and London, United Kingdom.
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