MFA
MFA Financial, Inc.
$9.45
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 69.0% below fair value
You pay
$9.45
Bear
$25.10
Fair
$30.48
Bull
$35.85
Bear
$25.10
+165.6%
$1.73 FFO × 17x
Fair
$30.48
+222.5%
$1.73 FFO × 21x
Bull
$35.85
+279.4%
$1.73 FFO × 24x
Key Value Driver
FFO/share ($1.73) × default P/FFO multiple
Implied Market Multiple
5.5x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $14.04 from 23 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $30.48 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 yield of 15.2% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $14.04 (from 23 analysts). Our estimate is 156% 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