DX
Dynex Capital, Inc.
$10.87
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 54.4% below fair value
You pay
$10.87
Bear
$19.72
Fair
$23.82
Bull
$27.93
Bear
$19.72
+81.5%
$1.29 FFO × 18x
Fair
$23.82
+119.3%
$1.29 FFO × 22x
Bull
$27.93
+157.0%
$1.29 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($1.29) × default P/FFO multiple
Implied Market Multiple
8.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$12.00
Divergence from AlphaVal
98%
Summary
At $1.29 FFO/share with a 22x default REIT multiple, the base-case value is $23.82 per share. Dividend yield: 6.3%. DDM cross-check: $12.67.
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 6.3% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $12.67 (47% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $12.00 (from 14 analysts). Our estimate is 98% 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