KBW labels Ellington, Longbridge as outperformers after robust Q2 earnings report

Following a strong second-quarter earnings report, analysts at Keefe, Bruyette & Woods (KBW) released a positive forecast for Ellington Financial and its reverse mortgage subsidiary, Longbridge Financial. In a note to investors published over the weekend, KBW said that it was “moderately raising” its guidance for Ellington’s earnings per share (EPS) to $2.12 by the end of 2026 and $2.05 by end of 2027, up from previous expectations of $1.96 and $2.00. And it continues to rate Ellington as an outperformer. The positive forecast comes after Ellington reported adjusted distributable earnings (ADE) of $0.60 per share in the second quarter, easily outpacing previous KBW guidance of $0.46 and higher than the company’s quarterly dividend of $0.39 per share. The analysts wrote that their estimates point to return on equity (ROE) of roughly 15.3% this year and 14.3% next year as ROE for the second quarter finished at 17.7%, up from 16.1% in the prior quarter. “We are maintaining our $15 (per share) price target, which equates to 1.1x book and remains unchanged,” the analysts wrote. “We continue to believe a premium to book is warranted given the stable book value, growing mortgage banki...