ARMOUR Residential REIT: Yield Too High to Buy Now
June 15, 2023
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ARMOUR ($NYSE:ARR) Residential REIT is a real estate investment trust that focuses on agency residential mortgage-backed securities (RMBS) issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. It primarily invests in fixed-rate RMBS, adjustable-rate RMBS, and hybrid ARM RMBS. The company is based in West Palm Beach, Florida. Despite being an attractive stock for those seeking higher yields, it is not wise to invest in the currently offered 18.4% yield from ARMOUR Residential REIT.
This stock has been trading at multiyear lows and has experienced high volatility in the past. Furthermore, the stock has been exposed to a number of external risks such as rising interest rates and a potential recession. With these factors in mind, investors should exercise caution when it comes to investing in ARMOUR Residential REIT at this time.
Price History
ARMOUR Residential REIT stock opened at $5.2 and closed at $5.1 on Wednesday, representing a 2.5% decrease from its prior closing price of $5.3. At this price, the yield is too high for investors to buy now, making this a bearish market trend for ARMOUR Residential REIT. Investors should cautiously proceed and wait until ARMOUR Residential REIT stock stabilizes before deciding to buy or sell. In the meantime, they should also keep an eye out for any potential developments in the company, such as corporate restructuring or news about its portfolio. 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 |
| -191.14 | -206.84 | – |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for ARR. More…
| Operations | Investing | Financing |
| 262.01 | -5.37k | 5.04k |
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 |
| 13.25k | 12.03k | 6.33 |
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
GoodWhale’s analysis of ARMOUR RESIDENTIAL REIT concluded that it is classified as a type of company that has the track record of paying out consistent and sustainable dividends, affectionately referred to as a ‘cow’. The Star Chart showed it had strong assets, medium dividend, profitability and weak growth. However, more concerning is the low health score of 0/10 with regard to its cashflows and debt, which suggests that it is less likely to sustain future operations in times of crisis. In terms of potential investors, those who value stability and reliability are likely to be the most interested in an ARMOUR RESIDENTIAL REIT investment. The company’s history of consistent dividend yields offers a predictable income stream for investors who are looking for a long-term income generator. Those seeking large growth potential may not find ARMOUR RESIDENTIAL REIT as attractive, however, due to its weaker growth prospects. 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
ARMOUR Residential REIT (ARR) is a real estate investment trust that specializes in investing in residential mortgage-backed securities issued or guaranteed by US Government agencies or government-sponsored entities. With a current dividend yield of 18.4%, investors may be tempted to invest in ARR for its high return potential.
However, it should be noted that ARR is a highly volatile stock and may experience large drops in share price depending on market conditions. Furthermore, investors should be aware that ARR has a high expense ratio compared to similar REITs and has relatively low liquidity. Therefore, investors should exercise caution when considering investing in ARR and should consider other REITs that offer a more secure and consistent return on investment.
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