ARR Intrinsic Value Calculator – ARMOUR RESIDENTIAL REIT Struggles to Stay Afloat Amidst Record-Setting Inverted Yield Curve and Rising Mortgage Rates.
February 12, 2023
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ARR Intrinsic Value Calculator – ARMOUR RESIDENTIAL REIT ($NYSE:ARR) (ARR) is a publicly traded real estate investment trust that specializes in acquiring and managing residential mortgage-backed securities. The company’s portfolio includes investments in mortgage-backed securities, adjustable-rate mortgages, and government-sponsored mortgage-backed securities. ARR has struggled to stay afloat amidst the record-setting inverted yield curve and rising mortgage rates. Mortgage News Daily recently reported that mortgage rates have climbed back up to around 6.5%, after a brief dip below 6%. This increase in rates is concerning for ARR, as higher rates make it more difficult to acquire mortgages and maintain the value of existing investments. Furthermore, the Treasury yield curve is now the most inverted it has been in over 40 years.
This can be especially damaging to leveraged firms such as ARR, as it increases their borrowing costs and puts persistent pressure on real estate-related stocks. The inverted yield curve is also causing a decrease in the demand for mortgage-backed securities, placing further strain on ARR’s operations. To combat this, ARR has engaged in aggressive hedging strategies, such as buying put options and investing in interest rate swaps. While these strategies have helped to mitigate some of the losses from the inverted yield curve, the company’s stock price has yet to recover. Given the current economic environment, it is uncertain how ARR will fare in the future. As such, it is essential that investors remain cautious when considering investing in ARR.
Market Price
Media sentiment has been mostly negative as the company continues to be impacted by the current economic environment. The company has been actively trying to adjust to the current market conditions, and has taken steps to reduce its exposure to potential losses. It has already made changes in the portfolio composition and is actively looking for ways to improve its risk management.
Additionally, it has cut back on its dividend payments in order to preserve capital. Despite the current challenges, ARMOUR RESIDENTIAL REIT remains committed to delivering strong returns for its shareholders over the long-term. It continues to focus on its core business and is working hard to develop strategies to address the current market conditions. The company is also working to strengthen its balance sheet and reduce its leverage in order to weather the current economic challenges. Overall, ARMOUR RESIDENTIAL REIT is doing its best to remain competitive in the current market environment. Its stock may have declined slightly, however it is still in a strong position and continues to look for ways to improve its performance. With its strong focus on risk management, the company is confident that it will be able to weather the current economic challenges and deliver strong returns for its shareholders in the future. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for ARR. More…
| Total Revenues | Net Income | Net Margin |
| -281.48 | -302.09 | – |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for ARR. More…
| Operations | Investing | Financing |
| 4.02 | -4.88k | 5.03k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for ARR. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 10.92k | 9.97k | 7.12 |
Key Ratios Snapshot
Some of the financial key ratios for ARR are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| – | – | – |
| FCF Margin | ROE | ROA |
| – | – | – |
Analysis – ARR Intrinsic Value Calculator
GoodWhale has conducted an analysis of ARMOUR RESIDENTIAL REIT’s wellbeing and concluded that the intrinsic value of its share is around $8.3. This value was calculated using GoodWhale’s proprietary Valuation Line, which takes into account factors such as the company’s financials, future prospects, and competitive landscape. Currently, ARMOUR RESIDENTIAL REIT’s stock is trading at $6.2, indicating it is undervalued by 25.0%. This suggests that now is a good time to invest in the company, as investors may be able to purchase shares at a discounted rate. However, investors should conduct their own research and due diligence before investing in any company and should assess their own risk tolerance, as there is no guarantee of returns. More…
Peers
The company is headquartered in Boca Raton, Florida and was founded in 2006. ARMOUR operates as a holding company that owns subsidiaries which are engaged in the business of acquiring, investing in, and managing residential mortgage-backed securities. The company competes against Chimera Investment Corp, Dynex Capital Inc, and Annaly Capital Management Inc.
– Chimera Investment Corp ($NYSE:CIM)
Chimera Investment Corporation is a real estate investment trust that primarily invests in adjustable-rate and fixed-rate residential mortgage loans, commercial mortgage loans, real estate-related securities, and other asset classes. The company has a market cap of $1.57 billion as of 2022.
– Dynex Capital Inc ($NYSE:DX)
Dynex Capital, Inc. is a publicly traded real estate investment trust. The company invests in a variety of real estate-related assets, including commercial mortgage loans, commercial mortgage-backed securities, and other real estate-related investments.
– Annaly Capital Management Inc ($NYSE:NLY)
Analysts have estimated that Annaly Capital Management Inc’s market cap would be around 10.08B as of 2022. The company’s main focus is on providing mortgage financing and servicing to the US residential and commercial real estate markets. In recent years, the company has expanded its operations into other areas such as healthcare and student housing.
Summary
Investors are closely watching ARMOUR RESIDENTIAL REIT, as the company is facing significant challenges due to the record-setting inverted yield curve and rising mortgage rates. While the media sentiment surrounding the company has largely been negative, investors should view this as an opportunity to evaluate the potential of investing in ARMOUR RESIDENTIAL REIT. Analysts are closely monitoring the stock, with some expecting the company to remain afloat despite the current market conditions. Investors should consider the company’s current financial position and outlook before making any decisions.
