EFC
Ellington Financial Inc.
$13.49
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 42.1% below fair value
You pay
$13.49
Bear
$19.26
Fair
$23.30
Bull
$27.34
Bear
$19.26
+42.8%
$1.48 FFO × 18x
Fair
$23.30
+72.7%
$1.48 FFO × 22x
Bull
$27.34
+102.7%
$1.48 FFO × 26x
Key Value Driver
FFO/share ($1.48) × default P/FFO multiple
Implied Market Multiple
9.1x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $13.50 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $23.30 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-based valuation: $9.69 (62% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $13.50 (from 13 analysts). Our estimate is 91% 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