CIM
Chimera Investment Corporation
$13.26
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 69.9% below fair value
You pay
$13.26
Bear
$36.55
Fair
$44.10
Bull
$51.66
Bear
$36.55
+175.6%
$2.84 FFO × 18x
Fair
$44.10
+232.6%
$2.84 FFO × 22x
Bull
$51.66
+289.6%
$2.84 FFO × 26x
Key Value Driver
FFO/share ($2.84) × default P/FFO multiple
Implied Market Multiple
4.7x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $13.00 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $44.10 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 11.8% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $35.05 (36% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $13.00 (from 16 analysts). Our estimate is 319% 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