NEW YORK (TheStreet) -- Ellington Financial (EFC) shares are down -4.1% to $23.58 on Wednesday after pricing its public offering of 8 million common shares representing limited liability company interests at $23.92 per share.
Underwriters will have 30 days to purchase up to an additional 1.2 million shares with net proceeds of the offering going to helping the specialty finance company acquire targeted assets.
The offering is expected to close September 8.
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TheStreet Ratings team rates ELLINGTON FINANCIAL LLC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ELLINGTON FINANCIAL LLC (EFC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- EFC's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 3.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for ELLINGTON FINANCIAL LLC is currently very high, coming in at 73.45%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 99.76% significantly outperformed against the industry average.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ELLINGTON FINANCIAL LLC reported lower earnings of $3.46 versus $5.32 in the prior year. For the next year, the market is expecting a contraction of 12.6% in earnings ($3.02 versus $3.46).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Capital Markets industry and the overall market, ELLINGTON FINANCIAL LLC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: EFC Ratings Report
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