Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Ellington Financial (NYSE: EFC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
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- Powered by its strong earnings growth of 2371.42% and other important driving factors, this stock has surged by 30.01% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although EFC had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 2646.3% when compared to the same quarter one year prior, rising from -$1.16 million to $29.54 million.
- ELLINGTON FINANCIAL LLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ELLINGTON FINANCIAL LLC reported lower earnings of $0.61 versus $2.46 in the prior year. This year, the market expects an improvement in earnings ($4.59 versus $0.61).
- EFC, with its decline in revenue, underperformed when compared the industry average of 26.8%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for ELLINGTON FINANCIAL LLC is rather low; currently it is at 17.30%. It has decreased significantly from the same period last year. Despite the weak results of the gross profit margin, the net profit margin of 191.50% has significantly outperformed against the industry average.
-- Written by a member of TheStreet Ratings Staff