MODEL VERDICT
Ellington Credit Company (EARN)
Relative Valuation•Peer multiples, Monte Carlo simulation & quality-adjusted fair value
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Composite score derived from valuation, quality, and risk factors
Quantitative model thresholds · For educational and research purposes only
| Methodology | Fair Value | vs Current | Weight | Quality | Status |
|---|---|---|---|---|---|
| Industry Median P/E 104 industry peers | $2.81 | -46.8% | 30% | A | Peer Data |
| Price / Book 117 industry peers | $7.32 | +38.6% | 25% | B | Model Driven |
| Price / Tangible Book 110 bank peers | $7.42 | +40.5% | 20% | B+ | Bank Primary |
| Dividend Yield 91 industry peers | $13.77 | +160.8% | 10% | B | Supplementary |
| Earnings Yield 105 industry peers | $2.81 | -46.8% | 8% | B | Data |
| Forward P/E 98 analyst estimates | $10.25 | +94.1% | 7% | A- | Analyst Est. |
| Weighted Output Blended model output | $6.02 | +14.0% | 100% | 83 | SLIGHTLY UNDERVALUED |
| EPS Growth ↓ | P/E Multiple → | 18× | 20× | 22× (Current) | 24× | 26× |
|---|---|---|---|---|---|
| Bear Case (2%) | $4 | $5 | $5 | $6 | $6 |
| Conservative (5%) | $5 | $5 | $6 | $6 | $7 |
| Base Case (-33.1%) | $3 | $3 | $4 | $4 | $4 |
| Bull Case (-45%) | $2 | $3 | $3 | $3 | $3 |
Cross-sectional regression predicting expected multiples based on growth, margins, ROIC, and beta.
| Multiple | Avg | Median | Min | Max | Std |
|---|---|---|---|---|---|
| P/E Ratio | 15.35 | 13.89 | 6.06 | 27.58 | 10.16 |
| EV/EBIT | 97.52 | 81.46 | 55.60 | 171.57 | 53.10 |
| EV/EBITDA | 97.52 | 81.46 | 55.60 | 171.57 | 53.10 |
| P/FCF | 7.89 | 5.67 | 4.03 | 19.73 | 5.97 |
| P/TBV | 0.85 | 0.85 | 0.67 | 0.97 | 0.10 |
| P/B Ratio | 0.85 | 0.85 | 0.67 | 0.97 | 0.10 |
| Div Yield | 0.13 | 0.13 | 0.09 | 0.15 | 0.02 |
| P/S Ratio | 12.93 | 4.02 | 1.65 | 60.84 | 23.51 |
Based on our peer multiples analysis with 17 valuation metrics, the model estimates EARN's fair value at $6.02 vs the current price of $5.28, implying +14.0% upside potential. Model verdict: Slightly Undervalued. Confidence: 83/100. This is a quantitative estimate, not a recommendation.
The blended fair value of $6.02 is calculated using four lenses: industry median multiples (40%), historical multiples (30%), forward estimates (20%), and quality-adjusted multiples (10%). Monte Carlo simulation (10,000 iterations) gives a range of $4.91 (P10) to $8.84 (P90), with a median of $6.34.
EARN's current P/E of 22.0x compares to the industry median of 11.7x (104 peers in the group). This represents a +88.1% premium to the industry. The historical average P/E is 15.4x over 4 years. Signal: High Premium.
7 analysts cover EARN with a consensus rating of Hold. The consensus price target is $6.00 (range: $6.00 — $6.00), implying +13.6% upside from the current price. Grade breakdown: Strong Buy (0), Buy (1), Hold (6), Sell (0), Strong Sell (0).
The model confidence score is 83/100, based on: data completeness (30), peer quality (25), historical depth (20), earnings stability (4), and model agreement (4). Cyclicality penalty: -0 points. The model shows strong agreement across inputs.
The model flags several key risks: (1) Multiple compression: EARN trades at the 7500th percentile of its historical P/E range. A reversion to median (15.4×) would imply significant downside. (2) Macro/regulatory risks are not captured in this model but remain material.
Peak earnings risk data is not available for EARN.
No. This dashboard is a quantitative research tool for educational and informational purposes only. It is not investment advice, a solicitation, or a recommendation to buy, sell, or hold any security. The operator of this platform is not a registered investment advisor (RIA), broker-dealer, or financial planner. All model outputs, fair value estimates, signals, and scenarios are the result of automated quantitative computations and should not be construed as professional financial guidance. You should consult a qualified, licensed financial advisor before making any investment decisions. Past model performance is not indicative of future results.