EFC
Ellington Financial Inc.
$13.29
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 36.8% below fair value
You pay
$13.29
Bear
$17.39
Fair
$21.03
Bull
$24.66
Bear
$17.39
+30.9%
$1.17 FFO × 18x
Fair
$21.03
+58.2%
$1.17 FFO × 22x
Bull
$24.66
+85.6%
$1.17 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($1.17) × default P/FFO multiple
Implied Market Multiple
11.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (13 analysts)
$13.50
Divergence from AlphaVal
56%
Summary
At $1.17 FFO/share with a 22x default REIT multiple, the base-case value is $21.03 per share. Dividend yield: 3.9%. 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 (54% 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 56% 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