EFC-PD
Ellington Financial Inc.
$22.80
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Moderate
·
Conviction
Fair Value
Trading 24.9% below fair value
You pay
$22.80
Bear
$24.99
Fair
$30.34
Bull
$35.70
Bear
$24.99
+9.6%
$1.37 FFO × 18x
Fair
$30.34
+33.1%
$1.37 FFO × 22x
Bull
$35.70
+56.6%
$1.37 FFO × 26x
Key Value Driver
FFO/share ($1.37) × default P/FFO multiple
Implied Market Multiple
16.6x
Summary
At $1.37 FFO/share with a 22x default REIT multiple, the base-case value is $30.34 per share. Dividend yield: 7.7%. DDM cross-check: $32.61.
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 7.7% is unusually high — make sure the company generates enough cash to keep paying it.
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