EFC
Ellington Financial Inc.
$11.65
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 43.3% below fair value
You pay
$11.65
Bear
$16.99
Fair
$20.54
Bull
$24.08
Bear
$16.99
+45.8%
$1.14 FFO × 18x
Fair
$20.54
+76.3%
$1.14 FFO × 22x
Bull
$24.08
+106.7%
$1.14 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($1.14) × default P/FFO multiple
Implied Market Multiple
10.2x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (13 analysts)
$14.00
Divergence from AlphaVal
47%
Summary
At $1.14 FFO/share with a 22x default REIT multiple, the base-case value is $20.54 per share. Dividend yield: 4.5%. DDM cross-check: $9.69.
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 (53% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $14.00 (from 13 analysts). Our estimate is 47% 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