Reviewing Whitestone REIT (WSR) and Ellington Residential Mortgage REIT (EARN)

Whitestone REIT (NYSE:WSR) and Ellington Residential Mortgage REIT (NYSE:EARN) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, institutional ownership, valuation, dividends, earnings and profitability.

Risk & Volatility

Whitestone REIT has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, Ellington Residential Mortgage REIT has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500.

Dividends

Whitestone REIT pays an annual dividend of $1.14 per share and has a dividend yield of 7.9%. Ellington Residential Mortgage REIT pays an annual dividend of $1.36 per share and has a dividend yield of 11.7%. Whitestone REIT pays out 91.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ellington Residential Mortgage REIT pays out 75.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ellington Residential Mortgage REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Whitestone REIT and Ellington Residential Mortgage REIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Whitestone REIT 10.59% 4.08% 1.34%
Ellington Residential Mortgage REIT -1.77% 10.35% 1.02%

Valuation & Earnings

This table compares Whitestone REIT and Ellington Residential Mortgage REIT’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Whitestone REIT $125.96 million 4.54 $8.33 million $1.25 11.50
Ellington Residential Mortgage REIT $30.14 million 4.87 $10.78 million $1.80 6.47

Ellington Residential Mortgage REIT has lower revenue, but higher earnings than Whitestone REIT. Ellington Residential Mortgage REIT is trading at a lower price-to-earnings ratio than Whitestone REIT, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

52.9% of Whitestone REIT shares are held by institutional investors. Comparatively, 61.4% of Ellington Residential Mortgage REIT shares are held by institutional investors. 5.3% of Whitestone REIT shares are held by company insiders. Comparatively, 2.0% of Ellington Residential Mortgage REIT shares are held 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.

Analyst Recommendations

This is a summary of recent ratings and target prices for Whitestone REIT and Ellington Residential Mortgage REIT, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Whitestone REIT 1 0 4 0 2.60
Ellington Residential Mortgage REIT 0 0 0 0 N/A

Whitestone REIT presently has a consensus target price of $13.30, suggesting a potential downside of 7.51%. Given Whitestone REIT’s higher possible upside, equities analysts clearly believe Whitestone REIT is more favorable than Ellington Residential Mortgage REIT.

Summary

Whitestone REIT beats Ellington Residential Mortgage REIT on 8 of the 15 factors compared between the two stocks.

Whitestone REIT Company Profile

Whitestone is a community-centered retail REIT that acquires, owns, manages, develops and redevelops high quality "e-commerce resistant" neighborhood, community and lifestyle retail centers principally located in the largest, fastest-growing and most affluent markets in the Sunbelt. Whitestone's optimal mix of national, regional and local tenants provide daily necessities, needed services and entertainment to the communities in which they are located. Whitestone's properties are primarily located in business-friendly Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio, which are among the fastest growing U.S. population centers with highly educated workforces, high household incomes and strong job growth.

Ellington Residential Mortgage REIT Company Profile

Ellington Residential Mortgage REIT, a real estate investment trust, specializes in acquiring, investing in, and managing 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 comprising 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. Ellington Residential Mortgage REIT was founded in 2012 and is based in Old Greenwich, Connecticut.

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