ARR
ARMOUR Residential REIT, Inc.
$13.59
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 72.0% below fair value
You pay
$13.59
Bear
$40.11
Fair
$48.54
Bull
$56.96
Bear
$40.11
+195.2%
$2.79 FFO × 18x
Fair
$48.54
+257.2%
$2.79 FFO × 22x
Bull
$56.96
+319.1%
$2.79 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($2.79) × default P/FFO multiple
Implied Market Multiple
4.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (25 analysts)
$15.00
Divergence from AlphaVal
224%
Summary
At $2.79 FFO/share with a 22x default REIT multiple, the base-case value is $48.54 per share. Dividend yield: 7.1%. DDM cross-check: $17.89.
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 7.1% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $17.89 (63% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $15.00 (from 25 analysts). Our estimate is 224% 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