AGNCM
AGNC Investment Corp.
$25.01
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 75.7% below fair value
You pay
$24.95
Bear
$85.27
Fair
$102.82
Bull
$120.37
Bear
$85.27
+241.8%
$5.20 FFO × 18x
Fair
$102.82
+312.1%
$5.20 FFO × 22x
Bull
$120.37
+382.4%
$5.20 FFO × 26x
Key Value Driver
FFO/share ($5.20) × default P/FFO multiple
Implied Market Multiple
4.8x
Summary
At $5.20 FFO/share with a 22x default REIT multiple, the base-case value is $102.82 per share. Dividend yield: 8.8%. DDM cross-check: $74.81.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
Dividend yield of 8.8% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $74.81 (27% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify