AGNCN
AGNC Investment Corp.
$25.77
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 72.7% below fair value
You pay
$25.84
Bear
$78.75
Fair
$94.52
Bull
$110.31
Bear
$78.75
+204.7%
$5.38 FFO × 18x
Fair
$94.52
+265.8%
$5.38 FFO × 22x
Bull
$110.31
+326.9%
$5.38 FFO × 26x
Key Value Driver
FFO/share ($5.38) × default P/FFO multiple
Implied Market Multiple
4.8x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $12.00 from 33 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $94.52 per share.
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 9.2% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $12.00 (from 33 analysts). Our estimate is 982% above the consensus -- consider that gap carefully.
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