IVR
Invesco Mortgage Capital Inc.
$5.54
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 64.8% below fair value
You pay
$5.54
Bear
$13.05
Fair
$15.76
Bull
$18.47
Bear
$13.05
+135.5%
$1.10 FFO × 14x
Fair
$15.76
+184.4%
$1.10 FFO × 17x
Bull
$18.47
+233.3%
$1.10 FFO × 20x
Adjust Assumptions
17.0x
$
Key Value Driver
FFO/share ($1.10) × default P/FFO multiple
Implied Market Multiple
5.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (20 analysts)
$7.75
Divergence from AlphaVal
103%
Summary
At $1.10 FFO/share with a 17x default REIT multiple, the base-case value is $15.76 per share. Dividend yield: 8.7%. DDM cross-check: $8.95.
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 8.7% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $8.95 (43% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $7.75 (from 20 analysts). Our estimate is 103% above the consensus -- consider that gap carefully.
This stock is 42% below its 52-week high, with weak or declining earnings. That combination often signals real trouble, even though the valuation below is based on other fundamentals.
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