DX
Dynex Capital, Inc.
$12.56
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 45.7% below fair value
You pay
$12.56
Bear
$19.13
Fair
$23.13
Bull
$27.13
Bear
$19.13
+52.3%
$1.30 FFO × 18x
Fair
$23.13
+84.1%
$1.30 FFO × 22x
Bull
$27.13
+116.0%
$1.30 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($1.30) × default P/FFO multiple
Implied Market Multiple
9.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$14.50
Divergence from AlphaVal
60%
Summary
At $1.30 FFO/share with a 22x default REIT multiple, the base-case value is $23.13 per share. Dividend yield: 5.4%. DDM cross-check: $10.15.
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 5.4% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $10.15 (56% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $14.50 (from 14 analysts). Our estimate is 60% 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