Executive Summary
Ellington Financial Inc. posted a robust QQ2 2024 revenue line of $85.35 million, delivering a strong year-over-year (YoY) growth rate of 56.9% and a quarter-over-quarter (QoQ) increase of 22.3%. The company also reported an operating income of $48.17 million and a net income of $59.17 million, supported by a clean gross margin (reported at 1.00) and an operating margin of approximately 56.4%. The sizeable interest expense of $66.87 million remains a key cost driver, underscoring the company’s leverage and asset-sensitive earnings profile typical of mortgage-related asset managers. The business generated positive net earnings despite a sizable non-operating expense component, but there is an apparent inconsistency between pretax and reported net income in the provided data that warrants a close check against the 10-Q/press release for precise tax and non-operating items.
From a balance-sheet perspective, Ellington holds substantial assets (approx. $15.09 billion) with a heavy emphasis on long-term investments (about $14.46 billion) and a solid cash position (about $198.5 million in cash and equivalents). Equity stands near $1.55 billion, with a net-debt position reported as negative, highlighting a liquidity-rich structure relative to reported liabilities. The company supported its equity base with dividends totaling roughly $40.33 million in the period and net cash outflows from operating activities around $88.6 million, contributing to a modest cash balance evolution to about $204.6 million at period end.
Valuation appears attractive on a price-to-book basis (P/B ~ 0.65) with an implied dividend yield around 3.98%. However, the stock trades at a high earnings multiple (P/E ~ 4.3) and a subdued cash-flow profile in the quarter, suggesting variability in near-term cash generation and a potential valuation discount reflecting the sensitivity of mortgage-related earnings to rate moves and credit cycles. Absent explicit forward guidance from management, the outlook hinges on interest-rate trajectories, prepayment dynamics, and performance of RMBS/CMBS assets as the macro backdrop evolves. Investors should monitor asset mix shifts, liquidity, and capital deployment as the primary levers of ongoing profitability and sustainable distributions.
Key Performance Indicators
QoQ: 22.25% | YoY:117.55%
QoQ: 51.08% | YoY:437.57%
QoQ: 76.27% | YoY:566.50%
QoQ: 93.75% | YoY:1 355.40%
Key Insights
Revenue: $85.35m (YoY +56.9%, QoQ +22.3%)
Gross Profit: $85.35m (margin ~100% per reported data)
Operating Income: $48.17m (margin ~56.4%)
Net Income: $59.17m (reported) with EPS $0.62
EPS (Diluted): $0.62; Wtd Avg Shares: 85.04m
Dividend Payout: $40.33m in the quarter; Dividend Yield: ~3.98%
Payout Ratio: ~68.2%
Cash & Equivalents: ~$198.5m; Net Cash/Investing Activities: -$76.29m (investing) and -$88.60m (operating); Free Cash Flow: -$88.60m
Total Assets: ~$15.09b; Long-Term Investments: ~...
Financial Highlights
Revenue: $85.35m (YoY +56.9%, QoQ +22.3%)
Gross Profit: $85.35m (margin ~100% per reported data)
Operating Income: $48.17m (margin ~56.4%)
Net Income: $59.17m (reported) with EPS $0.62
EPS (Diluted): $0.62; Wtd Avg Shares: 85.04m
Dividend Payout: $40.33m in the quarter; Dividend Yield: ~3.98%
Payout Ratio: ~68.2%
Cash & Equivalents: ~$198.5m; Net Cash/Investing Activities: -$76.29m (investing) and -$88.60m (operating); Free Cash Flow: -$88.60m
Total Assets: ~$15.09b; Long-Term Investments: ~$14.46b; Total Liabilities: ~$13.52b; Total Equity: ~$1.55b
Cash Flow Metrics: Net cash from operating activities negative; Net Change in Cash: +$10.80m; Cash at end: ~$204.61m
Valuation Multiples: P/B ~0.65; P/E ~4.3; Dividend Yield ~3.98%
Current Ratio: 3.27; Debt/Equity: 8.54; Company Equity Multiplier: ~9.72
Notes: The data shows an inconsistency between pretax income ($48.17m) and net income ($59.17m) in the provided figures, and a large interest expense relative to operating income. Readers should verify the figures against the company’s official filings for precision.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
85.35M |
56.86% |
22.25% |
| Gross Profit |
85.35M |
117.55% |
22.25% |
| Operating Income |
48.17M |
437.57% |
51.08% |
| Net Income |
59.17M |
566.50% |
76.27% |
| EPS |
0.62 |
1 355.40% |
93.75% |
Key Financial Ratios
operatingProfitMargin
72.9%
operatingCashFlowPerShare
$-1.03
freeCashFlowPerShare
$-1.03
dividendPayoutRatio
68.2%
Management Commentary
Notes: The earnings transcript data is not provided in the supplied dataset. Consequently, the following highlights are anchored to the reported results and customary management themes for Ellington Financial in this segment, but do not include verbatim quotes from an earnings call. If a transcript becomes available, these themes can be mapped to management commentary with direct quotes.
- Strategy and asset mix: Ellington’s results reflect a diversified portfolio of RMBS, CMBS, CLOs, and other mortgage-related assets, with a heavy weighting toward long-term investments. The strong revenue and near-1.0 gross margin imply resilient carry and yield generation from high-quality asset classes in QQ2 2024.
- Operations and efficiency: Operating income margin of ~56% signals substantial operating leverage given the revenue base, though the sizeable interest expense indicates sensitivity to financing costs and refinancing activity.
- Liquidity and capital allocation: A solid cash position and negative net debt point to liquidity strength, aiding flexibility in deploying capital or funding new investments amid rate volatility. Dividends remain a meaningful portion of cash deployment, consistent with REIT-like payout practices.
- Credit and market environment: Mortgage-related assets are intrinsically sensitive to rate moves, prepayment speeds, and credit spreads. Management commentary in the held-back transcript would likely address prepayment trends, hedging effectiveness, and the evolution of asset quality in RMBS/CMBS portfolios.
Forward Guidance
No explicit forward-looking guidance was provided in the supplied data for QQ3 2024 or beyond. Investors should rely on management commentary in accompanying filings and industry context. Qualitative factors and potential scenarios:
- Baseline scenario: If prevailing interest rates stabilize and prepayment speeds normalize, Ellington could sustain current revenue momentum driven by its large long-term investment base, though net cash from operations may remain pressured by non-cash/financing dynamics.
- Downside scenario: Higher rates or widening credit spreads could compress net interest income, elevate financing costs, and weigh on asset values, pressuring both profitability and distributable cash flow.
- Upside scenario: A favorable spread environment, improved hedging effectiveness, or selective capital redeployments into higher-yielding assets could expand net income and cash flow per share, supporting multiple expansion.
Key monitoring metrics: (1) asset yields by segment (RMBS/CMBS/CLOs), (2) prepayment speeds and default experience in RMBS, (3) financing mix and cost of funds, (4) liquidity coverage and ability to fund new investments, (5) dividend sustainability relative to cash flow.