Ellington Residential Current Debt

EARN Stock  USD 7.13  0.12  1.71%   
Ellington Residential has over 729.54 Million in debt which may indicate that it relies heavily on debt financing. At this time, Ellington Residential's Debt To Assets are very stable compared to the past year. As of the 23rd of July 2024, Total Debt To Capitalization is likely to grow to 0.96, while Net Debt is likely to drop about 408 M. With a high degree of financial leverage come high-interest payments, which usually reduce Ellington Residential's Earnings Per Share (EPS).

Asset vs Debt

Equity vs Debt

Ellington Residential's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Ellington Residential's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Ellington Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Ellington Residential's stakeholders.
For most companies, including Ellington Residential, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Ellington Residential Mortgage, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Ellington Residential's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book
0.9616
Book Value
7.211
Operating Margin
0.8978
Profit Margin
0.2469
Return On Assets
0.0059
Given that Ellington Residential's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Ellington Residential is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Ellington Residential to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Ellington Residential is said to be less leveraged. If creditors hold a majority of Ellington Residential's assets, the Company is said to be highly leveraged.
At this time, Ellington Residential's Liabilities And Stockholders Equity is very stable compared to the past year. As of the 23rd of July 2024, Total Current Liabilities is likely to grow to about 766 M, while Non Current Liabilities Total is likely to drop about 75.9 M.
  
Check out the analysis of Ellington Residential Fundamentals Over Time.

Ellington Residential Bond Ratings

Ellington Residential Mortgage financial ratings play a critical role in determining how much Ellington Residential have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Ellington Residential's borrowing costs.
Piotroski F Score
4
PoorView
Beneish M Score
(2.01)
Possible ManipulatorView

Ellington Residential Debt to Cash Allocation

As Ellington Residential Mortgage follows its natural business cycle, the capital allocation decisions will not magically go away. Ellington Residential's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors.
Ellington Residential Mortgage currently holds 729.54 M in liabilities with Debt to Equity (D/E) ratio of 8.04, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Ellington Residential has a current ratio of 0.17, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Note, when we think about Ellington Residential's use of debt, we should always consider it together with its cash and equity.

Ellington Residential Total Assets Over Time

Ellington Residential Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Ellington Residential uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.

Ellington Residential Debt Ratio

    
  87.0   
It appears that most of the Ellington Residential's assets are financed through debt. Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the Ellington Residential's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Ellington Residential, which in turn will lower the firm's financial flexibility.

Ellington Residential Corporate Bonds Issued

Ellington Net Debt

Net Debt

407.97 Million

At this time, Ellington Residential's Net Debt is very stable compared to the past year.

Understaning Ellington Residential Use of Financial Leverage

Leverage ratios show Ellington Residential's total debt position, including all outstanding obligations. In simple terms, high financial leverage means that the cost of production, along with the day-to-day running of the business, is high. Conversely, lower financial leverage implies lower fixed cost investment in the business, which is generally considered a good sign by investors. The degree of Ellington Residential's financial leverage can be measured in several ways, including ratios such as the debt-to-equity ratio (total debt / total equity), or the debt ratio (total debt / total assets).
Last ReportedProjected for Next Year
Net Debt691 M408 M
Short and Long Term Debt Total729.5 M951.4 M
Long Term Debt3.6 M4.3 M
Long Term Debt Total3.6 M4.8 M
Short and Long Term Debt1.8 B1.5 B
Short Term Debt729.5 M942.4 M
Net Debt To EBITDA 13.87  14.57 
Debt To Equity 5.35  7.46 
Interest Debt Per Share 52.09  28.95 
Debt To Assets 0.77  0.87 
Total Debt To Capitalization 0.84  0.96 
Debt Equity Ratio 5.35  7.46 
Debt Ratio 0.77  0.87 
Cash Flow To Debt Ratio(0.01)(0.01)
Please read more on our technical analysis page.

Pair Trading with Ellington Residential

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Ellington Residential position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ellington Residential will appreciate offsetting losses from the drop in the long position's value.

Moving together with Ellington Stock

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Moving against Ellington Stock

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  0.33MA MastercardPairCorr
The ability to find closely correlated positions to Ellington Residential could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Ellington Residential when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Ellington Residential - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Ellington Residential Mortgage to buy it.
The correlation of Ellington Residential is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Ellington Residential moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Ellington Residential moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Ellington Residential can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching

Additional Information and Resources on Investing in Ellington Stock

When determining whether Ellington Residential offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Ellington Residential's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Ellington Residential Mortgage Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Ellington Residential Mortgage Stock:
Check out the analysis of Ellington Residential Fundamentals Over Time.
You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.
Is Mortgage Real Estate Investment Trusts (REITs) space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Ellington Residential. If investors know Ellington will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Ellington Residential listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
0.185
Dividend Share
0.96
Earnings Share
0.34
Revenue Per Share
1.532
Quarterly Revenue Growth
(0.83)
The market value of Ellington Residential is measured differently than its book value, which is the value of Ellington that is recorded on the company's balance sheet. Investors also form their own opinion of Ellington Residential's value that differs from its market value or its book value, called intrinsic value, which is Ellington Residential's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Ellington Residential's market value can be influenced by many factors that don't directly affect Ellington Residential's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Ellington Residential's value and its price as these two are different measures arrived at by different means. Investors typically determine if Ellington Residential is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Ellington Residential's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

What is Financial Leverage?

Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.

Leverage and Capital Costs

The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.

Benefits of Financial Leverage

Leverage provides the following benefits for companies:
  • Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
  • It provides a variety of financing sources by which the firm can achieve its target earnings.
  • Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.