Ellington Residential Mortgage (NYSE: EARN) has been showing a bullish trend, with a recent day typical price of
$6.76, inching closer to its 52-week high of
$7.05. The company's risk-adjusted performance stands at 0.0825, indicating a relatively low risk for investors. Furthermore, the firm's operating income of
$49.8M and net income of
$4.6M suggest a healthy financial status. However, investors should note the company's maximum drawdown of 7.28, which could indicate potential downside risk. Despite this, the Wall Street target price of
$9.83 suggests a positive outlook for EARN in the coming months.
Important Points
Five analysts have given Ellington Residential Mortgage an average rating of 'Buy'. This consensus is typically based on technical analysis, which uses price momentum, patterns, and trends derived from historical prices. The goal is to identify signals based on the market sentiment and investors' perception of Ellington's future value. Let's delve into some aspects of Ellington's technical analysis.
Using predictive
technical analysis, we can analyze different prices and returns patterns and
diagnose historical swings to determine the real value of Ellington Residential Mortgage. In general, sophisticated investors focus on analyzing Ellington Residential stock price patterns and their correlations with different microeconomic environment and drivers. They apply predictive analytics to build Ellington Residential's daily price indicators and compare them against related drivers such as
momentum indicators and various other types of predictive indicators. Using this methodology combined with a more conventional
technical analysis and
fundamental analysis, we attempt to find the most accurate representation of
Ellington Residential's intrinsic value. In addition to deriving basic predictive indicators for Ellington Residential, many experienced traders also check how macroeconomic factors affect Ellington Residential price patterns. Please read more on our
technical analysis page or use our predictive modules below to complement your research.
How does Ellington Stands against Peers?
Analyzing Ellington Residential competition or peers my help you to expand the diversification possibilities of your existing portfolios and to get a better perspective on locking in new positions. Try to analyze the advantages of investing in traded instruments related to Ellington Residential across multiple sectors and
thematic ideas. A good competitive analysis can cover a lot of different areas. But what areas to choose depends on who you are. The more exhaustive you are in your analysis, the more effective your competitive analysis will be. Check out
Ellington Residential Competition DetailsEllington Residential Gross Profit
Ellington Residential Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Ellington Residential previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Ellington Residential Gross Profit growth over the last 10 years. Please check Ellington Residential's
gross profit and other
fundamental indicators for more details.
Closer look at Ellington Residential Mean Deviation
Ellington Residential Mortgage has current Mean Deviation of 1.28. The mean deviation of the equity instrument is the first measure of the distances between each value of security historical prices and the mean. It gives us an idea of how spread out from the center the distribution of returns.
Mean Deviation is the average of the absolute values of the differences between price distribution numbers and their mean. Mean deviation of equity instrument with a lot of historical data is a biased estimator because the time horizon used in calculation will always be much smaller than the entire price history of the equity.
The mean deviation is typically used as a measure of dispersion for small investment horizon, otherwise standard deviation is a better measure of dispersion.
Mean Deviation | = | SUM(RET DEV)N |
| = | 1.28 |
| SUM | = | Summation notation |
| RET DEV | = | Sum of return deviations of Ellington Residential |
| N | = | Number of calculation points for selected time horizon |
Let's now compare Ellington Residential Mean Deviation to its closest peers:
| EARN | 1.2751774540863177 |
| DX | 1.11 |
| ORC | 1.47 |
| ARR | 1.51 |
| BRMK | 1.63 |
"Buy low, sell high" is a classic investment strategy, and Ellington Residential Mortgage (NYSE: EARN) seems to be following this trend. With a 50-day moving average of $6.47 and a 200-day moving average of $6.31, the stock has shown a bullish trend that might continue into May. The company's operating margin of 1.05% and operating income of $49.8M indicate a healthy financial standing. However, investors should note the high probability of bankruptcy at 77.56%, which adds an element of risk. Despite this, with a price to book ratio of 0.96X and a payout ratio of 37.21%, EARN might offer potential upside for risk-tolerant investors..
Possible May collapse of Ellington?
Ellington Residential Mortgage REIT (EARN) currently exhibits a potential upside of just 2.87, suggesting a significant reduction in its growth potential. This decrease may indicate an impending decline in volatility. Investors should exercise caution as this could signal a potential downturn in May. It's crucial to monitor the company's performance in the upcoming weeks to evaluate the potential impact of this volatility decrease on its stock price. Ellington Residential Mortgage currently shows a below-average downside deviation, with an Information Ratio of 0.11 and Jensen Alpha of 0.19. Understanding market volatility trends can assist investors in market timing. Proper use of volatility indicators allows traders to gauge Ellington Residential's stock risk against market volatility during both bullish and bearish trends.
The increased volatility of bear markets can directly affect Ellington Residential's stock price, causing investor stress as share values drop. This often prompts investors to rebalance their portfolios by purchasing different financial instruments as prices decline.In conclusion, Ellington Residential (EARN) presents a compelling investment opportunity. With a Valuation Real Value of
$5.44 and a possible Upside Price of
$8.66, the potential for significant returns is evident. Despite the current Analyst Number of Holds standing at 4, the Analyst Overall Consensus is a 'Buy'. The Naive Expected Forecast Value of $6.91 further supports this positive outlook. However, investors should remain cautious of the possible Downside Price of $5.17. As we approach the Fiscal Year End in December, it will be interesting to see if EARN can indeed turn the corner..
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Rifka Kats is a Member of Macroaxis Editorial Board. Rifka writes about retail product and service companies from the perspective of a regular consumer and sophisticated investor at the same time. She is passionate about corporate ethics and equality in the workforce.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Rifka Kats do not own shares of Ellington Residential Mortgage. Please refer to our
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