{"id":932778,"date":"2026-09-08T13:24:04","date_gmt":"2026-09-08T18:24:04","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2026\/09\/08\/kbw-labels-ellington-longbridge-as-outperformers-after-robust-q2-earnings-report\/"},"modified":"2026-09-08T13:24:04","modified_gmt":"2026-09-08T18:24:04","slug":"kbw-labels-ellington-longbridge-as-outperformers-after-robust-q2-earnings-report","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2026\/09\/08\/kbw-labels-ellington-longbridge-as-outperformers-after-robust-q2-earnings-report\/","title":{"rendered":"KBW labels Ellington, Longbridge as outperformers after robust Q2 earnings report"},"content":{"rendered":"
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Following a strong second-quarter earnings report<\/a>, analysts at Keefe, Bruyette & Woods<\/strong> (KBW) released a positive forecast for Ellington Financial<\/strong> and its reverse mortgage subsidiary, Longbridge Financial<\/a><\/strong>.<\/p>\n

In a note to investors published over the weekend, KBW said that it was \u201cmoderately raising\u201d its guidance for Ellington\u2019s 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.<\/p>\n

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\u2019s quarterly dividend of $0.39 per share. <\/p>\n

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.<\/p>\n

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\u201cWe are maintaining our $15 (per share) price target, which equates to 1.1x book and remains unchanged,\u201d the analysts wrote. \u201cWe continue to believe a premium to book is warranted given the stable book value, growing mortgage banking businesses, and dividend coverage. Shares currently trade at 0.97x current book value and a ~12% dividend yield.\u201d<\/p>\n

On Monday, Ellington\u2019s shares were trading at roughly $13.40, down 1.51% from the close of the market on Friday.<\/p>\n

\u201cWe like EFC\u2019s focus on niche credit strategies using low balance sheet leverage,\u201d KBW\u2019s note added. \u201cThe company also has a relatively stable book value and upside earnings<\/a> optionality from its mortgage banking business.\u201d<\/p>\n

KBW<\/a> noted that Ellington has exceeded its quarterly dividend on both a GAAP and ADE basis for eight straight quarters, with the current dividend of $0.39 equating to a break-even ROE of about 11.5%.<\/p>\n

\u201cManagement said the $0.13 monthly dividend remains appropriate and that continuing to build book value per share is the best use of excess earnings, while acknowledging that ADE running this strong could create upward pressure on the dividend under REIT<\/a> distribution requirements,\u201d the analysts wrote.<\/p>\n

Consistent secondary market activity<\/h2>\n

During last week\u2019s earnings call with investors and analysts, Ellington\u2019s leadership discussed its thoughts on Longbridge\u2019s contributions to the firm\u2019s broader financial performance. <\/p>\n

\u201cFor the last two quarters, their contribution to ADE was 23 cents and 21 cents, and the average of 2025 was 12 cents. The portfolio is growing. Origination volumes are growing,\u201d said JR Herlihy, Ellington\u2019s chief financial officer.<\/p>\n

Herlihy pointed out that recent quarterly net profits from Longbridge\u2019s mortgage servicing rights deals have come in at roughly $0.06 per share, with other segments accounting for about $0.17 per share. Company executives expect this to continue as Longbridge has been executing roughly two securitizations<\/a> per quarter in recent years \u2014 much of it tied to growth in the proprietary reverse mortgage market.<\/p>\n

\u201cSecuritization execution has been notably strong in the first two quarters of this year,\u201d he said. \u201cI don\u2019t know that 16, 17 cents (per share) aside from servicing is the run rate. It\u2019s probably a little bit high, but we don\u2019t need it to be that high to hit our mid-40s run rate (guidance) that we had mentioned last quarter. If it\u2019s in the low- to mid-teens, that\u2019s plenty to kind of carry its contribution to the overall earnings stream.\u201d<\/p>\n

Longbridge reported $30.2 million of net income attributable to common stockholders in the second quarter, more than half of Ellington\u2019s total profit of $54.4 million from April to June. And Longbridge originated $589.7 million of reverse mortgages in Q2 2026, up 38% increase year over year.<\/p>\n

Across all reverse mortgage originations, $316.2 million (or 54%) were tied to proprietary loans<\/a>, a share that\u2019s representative of what other lenders are seeing. \u201cThat momentum is continuing with July 2026 marking Longbridge\u2019s highest ever month for prop reverse mortgage originations and submissions,\u201d Herlihy said last week.<\/p>\n

But the company is also seeing modest progress with government-insured reverse mortgages. Longbridge\u2019s HECM Mortgage-Backed Securities (HMBS<\/a>) market share hit a new high of 29% for the quarter, making it the No. 2 issuer in the market behind only\u00a0Finance of America<\/strong>. <\/p>\n

\u201cWhen rates<\/a> are low, the principal limit factors that are dictated by [the\u00a0Federal Housing Administration<\/strong>] actually are often more competitive than on the prop side, but when rates rise, the opposite is true,\u201d said Laurence Penn, Ellington Financial\u2019s president and CEO. \u201cWe\u2019re actually, in some cases, seeing the prop product take some of that market share away from the government product.\u201d<\/p>\n<\/div><\/div>\n

Neil Pierson
Read More<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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 \u201cmoderately raising\u201d its guidance for Ellington\u2019s earnings per share (EPS) to $2.12 by<\/p>\n","protected":false},"author":1,"featured_media":932779,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[152301,26803],"tags":[51233,11414],"class_list":["post-932778","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ellington","category-labels","tag-ellington","tag-labels"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/932778","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=932778"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/932778\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/932779"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=932778"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=932778"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=932778"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}